Entering the World of Property Investments
changes to negative gearing & capital gains tax reform off the table for
the foreseeable future and a relaxation of lending practices on the cards we
are starting to see blue sky on the horizon for the Australian property market.
While prices are still suppressed after the combination of the banking royal commission and the fear of uncertainty & doubt left over from the election some budding investors may be looking to take advantage of these lows and the ability to negotiate hard in the buyers’ market. If you have been holding off investing until the election results were in but are now unsure of where exactly to start below is a brief step by step guide for beginner investors looking to gain property exposure.
“It’s pretty clear to us that the bottom [of the market] is just around the corner,” Commonwealth Bank senior economist Gareth Aird said. “We had a 15 per cent [peak-to-trough price forecast] and we’re almost there now.”
The first step to achieving many of our
goals in life is formulating a plan on how we intend to reach them. This should
be especially true for your journey into the world of property investment,
forming clear goals will act as a driver for your motivation as you continue along
Think about why you’re driven to invest, for example what level of passive income would you need to have to live comfortably past retirement age and the size of your portfolio you feel you would need to support this goal.
The second step is choosing a strategy.
You need to ask yourself what level of commitment your willing and able to have
with the properties and work backwards from there to meet your goals. If you
have more free time on your hands strategies such as renovating, or property
development may be for you. Having someone in your life to act as a mentor who
is experienced in property investment will be very helpful throughout the
process. If you have less time on your hands and are looking for a set and
forget style investment a rental property with a strong cashflow might be for
The third step is about protecting yourself. Now you have a plan that suits your experience, lifestyle and budget you need to remember to do your due diligence and research for every property.
A good rule of thumb is to underestimate your returns and overestimate risk factors such as vacancy while in this stage. This may sound overwhelming however, it is important not to get stuck at this stage, it can be as simple as working industry professionals & knowing what questions to ask.
The fourth and final step is taking
steps to bring your plan into action and buy a property!
You will learn a lot more on the way, but you can be confident knowing you’ve taking a planned methodical approach into the world of property investing. Listen to your mentor, trust your research, speak to professionals and take action.
Your journey may be easier and much less stressful then you first expected.