Head vs Heart - Why It’s Important To Invest Time Before Money
Here's a few simple things you can do to minimise risks and maximise returns.
Investing can be a lucrative business.
Dreams of good returns, and thoughts of doing something financially beneficial to set up your future, are certainly attractive.
Once you decide to go down this path, it’s easy to get caught up in the excitement and decide to jump straight in.
There’s no time like the present, right?
But like anything, there are risks. And just like taking a plunge on stocks, when it comes to property investing, there’s plenty to consider.
Although some risks are inherent, there’s still lots you can do to give yourself a good chance of success.
The best thing? Slow down.
Take your time to consider every detail, take all emotion out of it and treat it like the business transaction it is before you get that new mortgage.
To help get you on track, here are some things to keep in mind.
Realistically, what’s my budget?
Before you even start looking at property, you need to truly understand what you can afford.
Because overcapitalising is an investors worst nightmare, and will prevent you from achieving a good return.
While those free online calculators are a handy guide, they don’t have the ability to completely consider your financial position.
Plus, there’s more than just a mortgage to consider.
Things like the deposit, stamp duty, legal fees, lenders mortgage & landlords insurance, loan application fees, land tax and title searches all add up to thousands on top of the selling price, so need to be taken into account - not to mention all the ongoing costs like maintenance and renovations.
It’s always best to crunch the numbers with your bank well ahead of time.
They’ll look at your individual position, weigh up risks, predict rental returns and can pre-approve a realistic amount so you don’t end up crushed when you find the ‘perfect’ investment property.
Search, Scour, Explore & Define.
Before buying an investment property, it pays to be patient.
Spend a few weeks (or months!) scrolling real estate sites, going to open inspections and signing up to multiple property agent alerts. Even take a drive around the suburb/s you’re focused on!
Why? It gives you a good feel for what’s going on in the market, and improves your ability to compare properties that come up, so you can more easily work out what constitutes ‘good value’.
And to make sure your search stays on track, determine your criteria.
What type of property you are willing to buy? New, old, off the plan?
Narrow it down based on things that are important to tenants, like land size, home features and location, keeping in mind potential maintenance or upgrades that may be needed, plus things like proximity to public transport and amenities.
By focusing your search early on, you’ll minimise the overwhelm and save a whole heap of wasted time (and money!) down the track!
Know Your Market Cycle.
Just like stocks, it’s always better to buy low and sell high. Same goes for real estate.
But unlike stocks - where a little chart can give you quick insight into trends - following the property market can be a little trickier.
The biggest issue with this? The market cycle you’re buying in directly impacts what you’ll pay, because prices are driven by demand.
Put simply - if demand for property is high, you’ll pay more. And this can impact on your returns down the track.
And to complicate things further, market cycles vary from location to location. For instance - capital cities may be losing value while regional areas might be on the up.
So how do you know if you’re onto a good thing? Know your market.
Listen to the news (but block out sensational headlines!), sign up to real estate newsletters that offer easy-to-understand market information, and speak with experienced real estate agents local to the area you want to buy in.
Because knowing, understanding and reading the market you want to invest in - with all its ups and downs - will be the single biggest factor in your success as a budding property investor.
Trust the professionals.
As an investor, it’s important to have the right team around you to help make rational - and financially beneficial - decisions.
Especially when it comes to property, because buying real estate as an investment is significantly different to buying your ‘forever home’.
While you might be happy to compromise on a few things for a home you plan to live in purely because you love it, the most common goal with investing is to make a good return with as little outlay (and hassle) as possible.
And that’s why it pays to build a solid network around you that also has this in mind.
Find professionals you trust and feel comfortable with - conveyancers, financial advisors, bank managers and local real estate agents with a proven track record. Even seek out other successful property investors that build portfolios for a living.
They are experts in their fields and can be a wealth of information. They’ll offer insight, give perspective and share their knowledge, so you can make sound choices. They might even suggest opportunities that you may never have considered!
Remember - their goal is to make sure you achieve yours, so it pays to keep them close at hand.
Buying an investment property (or two) can certainly set you up for a financially secure future.
But there are also risks involved.
So before putting down that deposit, fully assess the situation, speak to the experts and consider all the facts.
Do this, and you’ll be well on your way to making a great return!
-------
And if you’d like some expert guidance and support? We’re ready and waiting to answer all your questions!
If you’re just getting started, or looking for more valuable property investment tips, tricks and hints, check out these other handy articles on our blog:
× Frequently Asked Questions About Property Investment
× Renovating Your Investment Property?
× Is Investing In Property Still Worth It?
And for all the very best property sales or investing advice, why not connect with us - We Connect Property are your local property market specialists with over 21 years’ experience in buying, selling and managing property in southern Adelaide.
Check out our 5 star Google reviews here to find out what our happy clients think!
Give us a call on 0403 799 983 today, or drop a line to sales@weconnectproperty.com.au - we can’t wait to chat!
To stay connected with everything real estate, follow us! Facebook | Instagram | TikTok
Or connect with us today for more information : Connect Now
We Connect Property - your Adelaide real estate & property management specialists.
DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.