How do I make a start on investing?
The best way to start is with a strategy or detailed plan. Most investors don’t know what they need to buy to fit in with their lifestyle, both now and in the next 3-5 years. If there’s no strategy in place, it’s likely that you will only ever buy one investment property.
Get educated on property investing is the next best step.
What makes the best investment property?
This very much depends on the preferred property type in the location that you’ve researched as a great place to buy. If you are looking at an area with predominantly young families living in 4-bed houses, then that would be the type of property you would purchase.
Do I buy a property to which I can add value in the future?
This is a ‘numbers’ question and needs to have due diligence done around the costs to see if it is viable to purchase. If you are buying something needing renovation, do you have the funds to do the renovation? It’s very important that you move a tenant in before you do the renovation/ repairs so that you can claim all repairs on tax. The renovation has done prior to moving a tenant means that the costs will not be tax-deductible.
How do I know what to research to find a great location to invest in?
There’s so much information online but the challenge is understanding what are the most important things you need to research to understand the property market. Many people have ‘opinions’ about the market and they are not based on fact. Media outlets present all manner of property stats as ‘facts’ but you need to beware of what’s behind the information and whether you can trust it. Always use trusted sources such as the Australian Bureau of Statistics, Council websites and dedicated Government infrastructure websites for research.
What price should I be paying for an investment property?
There’s what we call the ‘sweet spot’ for property investing and that is the price point in that researched location where you want to purchase where most people can afford to buy if you need to sell and also the price point where most people can afford to comfortably rent it. These properties are affordable and most investors have built very strong portfolios by having their focus on buying these mid-range properties.
What happens if I am negotiating the price of a property and my offer keeps getting rejected?
Most investors will offer well below the asking price of a property to ‘test’ the vendor to see whether the property can be purchased under market value. When the cycle is in a ‘buyer’s market’ in other words there are plenty of properties on the market for sale and not many buyers, you can achieve very good under market property purchases.
If it is a “sellers market”, where there are not many properties on the market and lots of buyers, it is very difficult to buy under market value and you may need to pay close to the asking price. The other option you have is to keep looking until more properties come onto the market and try again.
What’s the difference between getting your finance from a Bank or going through a mortgage broker?
A bank will provide you with their loan product/s and often you are dealing with several people throughout the purchase process of the property. The product they have may not be the most suitable for you.
If you choose to work with a professional, experienced mortgage broker you will be offered a more tailored service. Most brokers have a panel of lenders that they can draw upon to find the best loan product for you and your circumstances. They have a vested interest in providing you with great, ongoing service.
Julie Crockett is the Founder of Australian Property Investment Solutions, a property investor, a buyer’s agent and author of How to Build a Rock Solid Property Portfolio.
If you are interested in finding out about investing in property, Julie is running a Facebook Live for us on the 21st of April – How to buy an investment property in a hot property market.