The world of property investing can seem daunting to an inexperienced young hopeful, yearning to get his or her foot on to the ladder – but this needn’t be the case!
So, here are my top tips to help you take the first steps to building your real estate empire, without making costly mistakes along the way.
1. Define your strategy
There are a number of approaches to property investing, and all of them have their risks and benefits.
It’s vital that as a new investor, you have some idea of the strategy you’re going to use, and how well it fits with your current situation.
For example, are you hoping to negatively gear the property?
While this could work well for a higher income earner, it may not have the same pay-off for those on a lower wage.
By the way... despite what some suggest, negative gearing is not an investment strategy- it's just the way your property is financed at a point in time.
Similarly, you may have been inspired by the seemingly endless array of home improvement programs on TV, and are thinking of flipping a renovator’s delight for a quick profit?
If so, you’ll need enough free time to either project-manage or work hands-on during the build, not to mention access to cash or credit to fund the work and you should have some experience under your belt, too.
Either way, having a plan and doing your due diligence on what is required to execute it is one of the cornerstones of investing success.
2. Do your research
Once you know what path you’re planning to follow, it’s time to do some thorough research into the areas and types of properties you’re thinking of buying.
House or apartment?
Inner-city, suburban or regional?
Residential or commercial?
Just so that you're aware...searching for a property is not the same as researching property.
Just because you know your local neighbourhood, it doesn't mean you understand "the property market."
You’ll need to know median prices and growth trends as well as rental vacancy rates and median rents, not to mention those little details about a suburb that can make or break your investment – such as school catchments, public transport links and other infrastructure.
Talk to local real estate agents about the kinds of tenants they have on their books.
- Also read:These are the most affordable suburbs within 10km of each CBD
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Is it mostly families?
Get to know the market, and incorporate your research into your strategy to maximise your return.
3. Get professional advice
A property strategist can be worth their weight in gold to help you build Strategic Property Plan to help you set realistic goals
And a buyer’s advocate will help bring a level of perspective that money just can't buy - particularly for first-time investors who aren’t au fait with navigating property protocols.
They have the inside scoop on the area and the current market, and unlike the selling agent they’re on your side.
That friendly agent who took you on a tour of the property is firmly allied with the seller, and no matter what they say to potential buyers, their number one priority is getting top dollar for their client as that is also their legal duty.
4. Spend now to save later
When you buy a property, be it to live in or as an investment, there’s always those niggling extra costs that seem so unnecessary… until they come back to bite you, sometimes literally.
Things like building and pest inspections, conveyancing fees and application fees when seeking to improve a property don’t come cheap.
However, forgo them at your peril!
These types of investing "checks and balances" can help you ascertain whether the property you’re looking at makes sense.
A $500 investment on a building inspection on a potential property investment could alert you to potential expensive hidden issues, which could cost you 10 times as much (or more) down the track.
These are just some of the tips I suggest for first-time or newish investors.
For more property investment advice for beginners, check out these 10 common mistakes to avoid to make sure you're on the right foot from the start.