So, you’re interested in getting into property investment. Not sure where to start? Taking the time to lay some groundwork and plot your investment game plan is essential to getting it right. Here are 7 key steps to help you on your way:
1. Decide what you want to get out of your property investing – in other words, be clear about exactly what you are trying to achieve and knowing where you want to be in the future. Be specific using dates and amounts you are aiming to make.
2. Assess your assets and expenses – which is as simple as it sounds. List all of your financial assets, such as your home, cars, current investments and other big ticket items. Then list all of your outgoing expenses such as mortgage repayments, credit cards, bills and any other regular outgoings. Having this information is vital in helping you gauge your ability to take on more debt.
3. Speak to a mortgage broker – Having a good mortgage broker can be a invaluable resource when starting out in property investment. Their years of experience, knowledge and access to a variety of investment loan options can all add up to steering you in the right direction. They can also advise you on your ability to borrow and the type of loan that would best suit your situation.
4. Talk to a property focused accountant – Investing in property is not just about earning rent; it’s also about maintaining your cash flow. A good accountant will be able to help you structure your investment property so that you will be able to maximise your tax deductions and cash flow. They can help minimise tax bills while protecting your propety investment and yourself. Getting comfortable with the numbers does not mean you have to be a maths whizz-kid but you will need to be able to understand what the numbers mean. A good accountant can help you with this.
5. Understand how much risk you can take – This involves completing a self-assessment looking at facts such as your age and number of years until retirement, if you have a financial buffer, if you have access to extra income, how reliable your income is, and how much risk you are comfortable with.
6. Familiarise yourself with property investment jargon – Get educated about all aspects of property investment. There is an abundance of information you can sink your teeth into but just remember to ensure the information you are looking at comes from a reliable source. Spend time understanding the market you are about to dive into.
7. Research managing agents – It is never too early to investigagte who you want to manage your property. Getting this part right is essential to ensuring your property investment journey is a smooth and successful one. There are 10 critical questions you must be asking your potential managing agent, which you can find here. Ensuring you have the right insurance to cover your property is another key component and something that your managing agent can help you decide on.
Some information courtesy of Nila Sweeney, property investment writer for realestate.com.au