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Buying a property continues to be a passionate hobby for Australians. Yet there are only about 1.3 million people in Australia who own an investment property. Surprising, is it?

There is no doubt that a large number of people dream of building an investment portfolio, but only a few succeed – as most drop out, confused by the process, giving up even before they learn the A, B, C of property investment.
 
property investment 5 tips
 
However, the reality is far from what you are made to believe. In truth, investing in property is a straightforward process. You don’t need to have any psychic abilities to predict the market or above-average intelligence to pick the right spot of land, all you need is honest research and thorough financial planning to build the investment portfolio you have always dreamed of.

So, here are 5 practical tips that will help you chart the real estate market with confidence, giving you a jumpstart on your investment journey:


Educate yourself
– Yes, a clichéd advice, but an important one. Why? Because many people stay on the fringes of the property market, not daring to dive in, because they are victims of too much information that they cannot verify or understand.

No one can really predict which way the property market would swing. However, by understanding property cycles and scanning historical data, it is possible to make an educated guess whether an investment is going to be profitable or not.

Instead of listening to every person you meet, focus on acquainting yourself with the market by reading books by successful investors, attending seminars, and reading magazines and blogs by experts. This will help you understand the basic concepts of property investing, making you more confident as an investor. You must also contact reputed real estate agents and order your free property report to understand the property dynamics in an area, better. For example, every property follows a cycle – it peaks, followed by a decline and a subsequent recovery phase. Understanding this concept can help you make a profitable decision.


Set specific goals
– As there can be no journey without a destination, investing in property without setting specific goals for yourself could be disastrous.

Why do you want to invest in a property? Do you want to build a passive income stream or a cosy retirement nest? Are you looking for long term capital gains or plan to make some quick money through flipping properties?

Once you determine your personal goals and a timeframe to achieve them, you would be able to build an effective investment strategy aligned to your requirement.


Have a strategy
– Following from the above point, you need a strategy in order to achieve your property goals. But what is the right investment strategy to follow? As always, there is no right or wrong answer here. There are many investment strategies you can follow such as negative gearing, flipping properties after renovation, building a monthly income stream through rental properties, buying off the plan, etc.
Note that negative gearing is one of the most popular strategies adopted by investors across Australia. However, any successful investor will tell you that you must aim for a positively geared property that offers a positive cash flow in the long run. Read more here.


Build a team of experts
– When you start out as an investor, it is recommended that you also work upon building a stellar team of experts you can count upon. This includes a financial advisor or accountant, a lawyer, a mortgage broker and a trusted property manager. With the right team in place to assist you, building and managing a property portfolio is an easy task. We also recommend that you don’t fall for these common mistakes:

  • Don’t get emotional about an investment property – Treat it like business.
  • Avoid a short-term perspective – Invest for the long term.
  • Don’t get lazy – Review your goals periodically and evaluate your portfolio regularly to stay on top of the game.

It also helps to prepare a realistic budget that takes into account the cost of maintaining the property, insurance premium, mortgage repayments, property management fees, etc. (Read more to know which of these expenses are tax deductible.)


Get a mortgage pre-approval

Before you start hunting for an investment property, it is worth finding out whether you qualify for a loan. It is a good idea to get a mortgage pre-approval, which you can get directly from a bank or through a mortgage broker.

As you would be aware, banks have tightened the criteria around investment lending of late. In such an environment, it is possible that a few banks might not accept your application or not support negatively geared properties. Consulting a mortgage broker, on the other hand, offers several advantages. First, you get a choice of products and an expert to guide you to the best products for your situation. Besides, brokers can get you much lower rates than what is generally advertised by lenders. Some brokers also pass on their commission to their clients, meaning a saving of a few thousand dollars.

Going through a broker before you apply for a pre-approval is better if you are not sure about your borrowing capacity, as applying for multiple pre-approvals can bring down your credit score.

At HashChing, you can not only find verified brokers in your area but also one that speaks your language or dialect! Get in touch to know more.

 

By Vidhu Bajaj,
HashChing Content Writer

 

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