First Time Property Investor Tips
However, like every other investment, before diving in head first it is essential that you understand the industry that you are going to be investing in. Here are some great first time investor tips to get you started.
Make sure this is your dream
Many of us become doctors and lawyers because that’s the dream that our parents had for us. If you are not truly passionate about property investment and you are doing it for anyone other than yourself, you may want to think about getting into something that you actually like. Property investment is something that you have to consider carefully because it is a big investment.
Pay off any existing debt
Property investment isn’t cheap, you are going to need enough money for a deposit if you really want to be successful. If you have other debts such as medical bills and student loans you might want to pay them off first so that you can free up some money.
Do you have a deposit?
You might have to pay a higher deposit for an investment property than you would for an owner-occupied building. There are different interest rates offered depending on what your LVR is. You also need to factor in additional costs such as mortgage insurance and government fees and charges such as stamp duty.
Higher interest rates
Even if the interest rates are low at the time you make your purchase, interest rates are typically higher on investment properties. You need to make sure that your monthly payments are low enough so that they don’t take up too much of your profit.
Does it need a signifcant renovation?
There is always going to be the temptation to purchase a property cheaply to renovate and then rent out . This is not always a good idea. Unless you know someone who will fix the property at a low cost, or you are capable of doing it yourself, you shouldn’t be careful about making such an investment. Renovation can cost a lot and you will end up being out of pocket.
Rental Returns Matter
It is a good idea to research what the rents are currently like in the area you plan to purchase an investment property. Will you be able to earn enough rent to cover your costs? Is it easy to get a tenant at the moment? What's the competition like with other properties for rent in the area at the moment? These are all questions to consider as with any investment, it's important to ensure that it's earning an income and you are getting a return.