Oct 05, 2017  | Tags: property investment, property, Adelaide

Our Insights

Many Australians have grown their wealth through property investment and CWM's Ben Calder explains why you should consider property. 

The ultimate goal of property investment is usually to supplement or replace working income for a comfortable lifestyle, particularly in retirement. Some invest in order to build up a nest egg for things like education funds for the kids.

You might have other reasons for wanting to get into property investment.

Easing into the waters of property investment can be as terrifying as it is exciting. 

Getting started in property investing doesn’t require too much in-depth knowledge,  analysis of anything confusing. So that’s the good news.

Despite its simple nature, however, the bad news is that property investing can go wrong if you aren’t properly prepared.

We’re going to talk about a few key areas in which you should be aware of before buying an investment property.

Prepare Your Finances

Make sure you know first where you stand financially. You can’t plunge headfirst into property shopping without knowing where all of your assets, debts and so on stand.

Work with your financial adviser to get a strong understanding of your position. 

As far as getting a loan is concerned, a steady job history, a good record of paying off a mortgage and savings helps. Take steps whenever you can to reduce debt and credit limits.

Budgeting doesn’t sound fun, especially if you aren’t used to living on one. But the better you can budget, the faster you’ll save.

When you do your research you’ll realise that you will have an upfront cost of the stamp duty tax. This can be a pretty hefty sum, depending on the cost of your property.

Work with your mortgage broker, who will ensure you’re fully qualified and prepared.

Have Goals 

Property investing isn’t something you do casually. You should have a plan before you even start looking at properties. Decide in advance what you hope to achieve by investing in property and set up a deadline. This will help you stay disciplined in your spending and saving. 

For example, you may decide that you want to be at your goal income in ten years. Stop now and determine what needs to be done by year five to reach that goal. What will you need to do every year to stay on-schedule? Every six months? Every month? Every week? And on it goes.

Start budgeting before you begin shopping. It’s better to select a property for your budget rather than choose one and have to ask: ‘Can I afford this?’ 

Having your priorities clearly in mind will make it easier to make decisions. 

Be careful that emotion doesn’t dictate your business decisions, however.

It helps to determine in advance just how much time you can commit to your property. 

Will you have a property manager take care of things or will you do it all yourself? Can you handle overseeing a large building or would something smaller be easier? Are you up for renovations?

Know what you can and cannot afford to lose and what risks you’re willing to take.

Location IS Everything 

When it comes to investing in a piece of property, you can’t predict how it will do on the market in years to come. Once it’s in your name, that’s it. You have very little control over what happens. 

You do have a lot of control, however, when it comes to selecting the property in the first place.

Start off by looking in an area where people want to rent. If there’s little demand for living space but plenty of places to choose from, then your property has small chance of being picked.

Not just any place will do.

Consider carefully purchasing a property that fits the area’s demand.

For example, inner city areas are good places to rent out apartments. Head further out, however, and you’d best look at family homes.

Take a look at what else is around a potential property.

Are schools, shopping districts, restaurants, sites for public transportation, beaches and so on easily accessible? If so, this will greatly increase the property’s value and chances of success.

Get Educated

There are advantages to property investing, but you have to do it the right way. There are no shortcuts. Don’t trust any offers of get-rich-quick schemes and their ‘guarantees’. There is nothing guaranteed in this field.

Education is your key to success in property investment. Your property likely won’t do well if you just do what one person recommends or follow the ‘advice’ of a biased property-pushing company.

Rather, read up on local real estate, and there are also some courses that may be relevant too. These should be provided by seasoned and reputable professionals. Educating yourself is your greatest advantage in the investment property sector. 

Add Value 

The only other thing you can do to boost the value of your investment and increase its chances is enhance the property.

You might make cosmetic upgrades ranging from a little new paint here and there to total renovations.

Any little thing you can do to maintain and improve the property will make more desirable in the eyes of potential tenants. Whenever you do sell, the building will fetch a better price if you’ve put a little love into it. 

Get Insured

Whilst your lender will likely require for you to have building insurance if you have a loan against your property, it’s important to make sure your asset is protected  in all instances, including landlord insurance.  Your Calder Wealth Management adviser can recommend a general insurance broker who can set you up for these and all your other general insurance needs.

And when talking about assets, don’t forget that your ability to earn an income is your greatest asset, so if you have debt or have just increased your level of debt, it’s important that you have income protection in place so that your income can continue in the event that you are unable to work due to accident or illness.    Talk to Calder Wealth Management now about ensuring your income is protected.

Get Professional Advice

Property investment isn’t a venture you can afford to set-and-forget. But with adequate research and attention to details, you can make a successful investment. 

The first step is to talk to your financial adviser. Not only will your adviser have a strong understanding of property investment and how to go about it, he or she will also have the best understanding of your personal financial position.

Contact Calder Wealth Management for a no obligations discussion about your needs. Calder Finance Broking will also ensure that you get the best possible loan deal. Contact us on 8373 3333 to arrange an appointment.