Tips for Buying an Investment Property in Australia
Buying a property investment can be a lucrative endeavour that could generate passive income . You want to make sure your investment pays off and that begins with choosing the right property.
Below are a few key tips and tricks that can help when purchasing an investment property.
Understand your goals
Before buying the property itself, you need to have clear investment goals in mind. Do you want to enjoy passive income in preparation for retirement? Are you looking for an investment property with quick turnover? Ask yourself what you want out of your investment property, as your goals will inform the type of property you buy and your investment strategy.
If you’re new to the world of property investment, it may be best to start with more manageable goals and work your way up. For those with more experience, look at your current property portfolio and see where you can expand. When you have set investment goals, it will make it much easier to decide on the right investment strategy.
Know how much you can borrow
One of the keys to a successful property investment is not buying beyond your means. It’s important that you figure out a realistic budget and stick to it. You can do that by reviewing your finances carefully and working out how much you can afford. For a quick estimate, you can use an online borrowing power calculator to get an idea of how much you can borrow.
Another great way to settle on a budget is by applying for a pre-approved investment loan. With a pre-approved loan, you’ll get to see how much a lender is willing to give you when you formally apply for investment finance. Although it doesn’t guarantee loan approval, it’s still a useful guide to help you create a reasonable budget.
Also, consider all your finance options. Understand all your finances options so you won’t miss out on possible investment opportunities.
Consider the full cost of an investment property
The purchase price of your property is just the first of a long list of expenses your investment property will incur. Of course, expenses will be tax deductible, so make sure you’re crunching the numbers in real terms.
When looking at the expenses, always include additional costs like stamp duty, property management expenses, and the like. Speak with your lender and accountant to discuss fees such as lender insurance, agent fees, annual interest costs, and the like. Don’t forget to account for ongoing costs such as council rates, land tax, agent fees, insurance, and maintenance.
Find the best place to invest
Always research locations carefully. Never rush into a property investment, especially in an area you barely know. Making the wrong decision could be costly, so you want to be sure you’ve done your research and understand the market.
When studying different locales, find out how much properties are selling for in certain areas and suburbs. Compare that with neighbouring areas. Because real estate is a very localised industry, two similar properties may have wildly different prices depending on where they are.
Aside from prices, look at rental and buyer demographics. Are there rental and buyer trends you can take advantage of? Are any developments planned nearby? Are you buying in a boom or a slump? To save time, get suburb reports with important information like median prices, market data, and demographics so you can have a deeper understanding of the area.
Choose the property carefully
After doing your research, it’s time to decide what type of property will help you meet your financial goals. The property you buy should match the demographic of the area. Houses, for example, may do well in family-oriented suburbs where homebuyers are looking for long-term accommodations. Meanwhile, units may be the more profitable choice in urban areas or neighbourhoods near universities.
You should also consider the type of tenants or buyers, you’re looking for. If you want a long-term tenant, it may be better to buy a house. Units, on the other hand, could be more beneficial for those looking for short-term tenants.
Find the right investment property loan
Your investment property loan could make or break your investment. With a good loan, you can make the most out of your investment without worrying about excess fees. Ideally, you want a loan with competitive interest rates and great features that can lower fees and help you pay it off sooner.
Investment loans aren’t a one-size-fits-all solution, either. Various types of investment loans are suitable for certain investors, such as a building investment property loan for those who want to build their properties or an expat home loan for those living abroad but wanting to invest back home.
If you want to learn more about investment property loans, get in touch with the lending specialists at loans.com.au. We can help you find a finance solution that fits your investment needs perfectly! Get in touch by calling 13 10 90 or apply for a loan today!
Find out in under 2 minutes if you qualify for one of our low rate home loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
