8 Tips on Preparing for Your First Property Investment in Australia
Property investing has shown to be one of the most effective means of accumulating wealth in recent years thanks to a booming housing market. If you’re planning to have a property investment in Australia, you should think about first preparing your funds for property investment.
Many would-be investors fantasise about climbing the investment property ladder, only to discover that they lack the financial means.
They then squander time and effort putting their ducks in a row to invest. Maybe if they had the appropriate knowledge, they could have started sooner.
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Advice for Your First Property Investment in Australia
1. Be specific about your objectives.
Consider the property investment’s reality as well as its prospective rewards. Check that you can afford your loan payments without jeopardising your lifestyle and that you’re satisfied with the hazards involved, such as a possible reduction in market value or hefty interest rate increases.
2. Do your research
Work out what kind of property is right for you. Consider the ideal location, the type of property and its size, the neighbourhood, and the potential rental income.
3. Set a budget that is within your limits.
Lenders often require a minimum deposit of 10% to 20% of the loan amount. You’ll also need money upfront for stamp duty, legal and conveyancing costs, insurance, upkeep, and interest on loans.
Consider how the cost of your borrowings may affect your investment and your interest rate loan possibilities and how they may change. Consider taking out a ‘fixed rate’ loan for at least some of your borrowing; this will ‘lock in’ a portion of your interest expenditure for a certain period. Know your limits
Work out if you can afford the costs associated with owning a property.
4. Review your credit history
Check your credit rating and make sure you’re happy with it before applying for a loan. Credit ratings are often used to measure a person’s financial trustworthiness and ability to repay loans. Your credit report will list all your loans, credit cards, and defaults.
5. Consider your exit strategy
Investing in property is often a long-term commitment. It would be best to consider how you’re going to make money from it and when you’ll sell it. Otherwise, you may get stuck with a property you can’t sell.
6. Budget for ongoing costs
Keep accurate records and be realistic about the ongoing costs of property ownership. This includes loan repayments, insurance, rates, and property maintenance.
7. Understand your legal obligations
When you buy a property, you’re legally required to notify your local council and obtain any relevant permits. You should also seek out information about the neighbourhood and other local issues.
8. Consider other alternatives
Consider options that allow you to own a piece of a property in addition to other assets, such as investing in real estate through the Australian Stock Exchange (ASX).
Among the advantages of investing are increased liquidity, diversification across multiple assets, and cheaper transaction costs. However, keep in mind that share values fluctuate daily instead of bricks and mortar, which might be less volatile.
A few examples are real estate investment trusts (REITs), house development, and leveraging equity from your self-managed super fund.
Property Investment in Australia: Time to Invest?
Many are scared to take the plunge and buy their first property investment in Australia, but in reality, the process is relatively straightforward if you know how to prepare your finances to invest in property.
With the correct information and guidance, anybody can get started. For other means and ways to pay down debt and achieve financial freedom, Central Coast Financial Planning Group is the expert to turn to! Get to talk with a financial adviser on Central Coast so you can talk about the best strategies for debt repayments and wealth creation. Get in touch with us today to book an initial meeting!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
