Promoted Content

Top 5 checkpoints before buying your first investment property

By Damian Collins

Promoted by Momentum Wealth

Property investment can be complex and, if done poorly, can also be highly costly. So what do you need to consider to help avoid financial traps and make the process easier?

Property investment requires a diligent approach, a learning attitude and a patient mind. When done right, there’s no doubt that it can be a significant wealth creator.

Here are 5 key checkpoints that the first-time property investor should consider before buying.

 

  1. YOUR MOTIVATION

Property investing is a long-term commitment. Those that want to become multi-millionaires overnight will be grossly disappointed. It’s not uncommon for investors to forget to take a long-term view, especially in cooler markets when capital growth on their existing properties slows. The true success comes from holding your property portfolio through several market cycles (and buying successive properties).

  1. YOUR REASON

Know what you want from your property – capital growth or rental yield? Don’t get caught up in the buying process without considering this!  If you are aged 20-45 you should likely target properties that grow in value, as this will increase your personal wealth. If you are nearing retirement, your focus should be on properties with higher rental yields as this substitutes your salary and provides more disposable income. You should also consider other, less typical asset classes such as direct commercial property or commercial property trusts, which typically provide higher rental yields than residential property.

  1. YOUR PLAN

Most property investors set out to acquire multiple properties to build wealth and become financially independent. However, the majority will never buy more than one, because they become distracted or ‘stuck’ in their journey. This is why creating a long-term plan is crucial to help you stay the course. Your plan should function like a strategic roadmap of your investment journey and include your goals, your finances, your risk tolerance and life circumstances. Your plan will have to be updated as your circumstances change and as you move through your investment journey.

  1. YOUR FINANCES

While many first-time investors become fixated by the asset selection phase, the perhaps most important aspect of property investment is your finances. You need to have a firm grasp of your household expenditure to ensure you have the financial capacity to acquire an investment property. Use a budget planner (such as this one) to help ensure you have sufficient disposable income to service the debt on the investment property. If you understand these aspects, you will have a firmer grasp of the type of properties that will work within your financial parameters.

  1. YOUR RESEARCH

First, check where you are gaining your information from. Selling agents are legally obliged to work for the seller, developers will only promote their own stock and some self-proclaimed “property advisors” may be receiving commissions from developers. If you’re being offered free property investment advice, this should raise red flags, which is why engaging an independent buyer’s agents is beneficial. Research reports such as Momentum Wealth’s Property Market Spotlights are a great starting point to begin your research and gain a good indication of macro-economic supply and demand drivers. Use property statistics wisely (they don’t always tell the full story!). Finally, be wary of so-called “hot spots” that are touted in the media. Property is a long-term investment and while “hot spots” might sell papers and seem appealing, they come and go so it’s best to focus on areas that will perform over the long run.  


If you would like more valuable advice before you buy your first investment property,
download Momentum Wealth’s free ebook “A beginner’s guide to buying your first investment property”. This starter's guide was written to help you understand the key fundamentals of property investment and to give you the tools to make smarter decisions about what, where and when to invest.

 

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podcast

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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  string(255) "

Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

" ["fulltext"]=> string(818) "

To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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  • The pitfalls that he has seen people get into<\/li>\r\n
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    Whether it\u2019s building a successful property portfolio or investing in one of their Development Funds, Open Corp can help you through every stage of your investment journey. The team has 40 property specialists who collectively have been involved in over $4 billion worth of property transactions and the acquisition of more than 8000 homes and investment properties.<\/p>\r\n

    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1185 (52) {
  ["id"]=>
  string(5) "18287"
  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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