Like many Australians, you might have spent your New Year’s break making plans for the future and setting goals. The most common New Year’s resolutions tend to include losing weight, getting healthier, saving more money and growing wealth. While the first couple of these goals tend to fall by the wayside after just a few weeks, goals to grow wealth often remain unrealised not thanks to a lack of commitment, but due to not having a plan.
Perhaps you’re hoping to purchase your first property, or upgrade the family home? Maybe you’re thinking of buying your first investment property, with a view to creating an investment portfolio? If you are hoping to grow your wealth through property investment in 2018, having a solid plan is the key. With the right advice and a strong plan, 2018 could be the year you finally realise those wealth-generating goals. We’ve put together some key points to help you build that plan.
- Know your goals
What is the end game for you? Are you looking for a lifestyle upgrade or an investment opportunity? For the purposes of this article, we will assume you’re looking to purchase an investment property.
When it comes to purchasing an investment property, it’s important to know what your strategy is for the investment. Making a plan should involve working backwards from your desired settlement date. For example, if you’d like to have your new property settled by June, you will need to exchange contracts by mid-April. Do you have the savings you require for the deposit, or are you planning to use the equity from an existing property?
- Loan pre-approval
The credit crunch that occurred in the aftermath of the GFC is now long gone, and the lending environment has changed significantly in Australia over the last 12 months. Nowadays, many potential borrowers are finding themselves unable to borrow what they need, in order to enter the property market. However, it is important to know what your borrowing capacity is, before you start hunting for properties. Speak with your mortgage broker about a pre-approval for your investment loan, and that way, you know exactly how much you’ve got to spend. The pre-approval will also help the process move along without hiccups once you’re ready to make an offer and begin the purchasing process.
- Research location
A great holiday destination does not necessarily equate to a great investment opportunity. It’s important not to confuse the two. While it may have seemed like a great idea to invest in a Gold Coast beachfront holiday unit while you were lying in your hammock over Christmas and setting goals for the next year, it may not be such a great idea in reality. Look for an area with low vacancy rates and good infrastructure (roads, schools, shopping and other amenities). Will the property be rented out to short-term Airbnb guests or long-term tenants?
Knowing the ins and outs of property location information can be tricky. This is where a buyer’s agent comes in handy. Enlist the services of someone who understands the complexities of property location, and save time by letting them do the research and analysis for you. (And best of all – you pay a fixed fee only upon success).
- What type of property are you looking for?
Property investment is, by nature, a long-term wealth strategy. But faster returns can be made if you’re willing (and able) to renovate. Once again, planning will go a long way to helping you make a good investment decision. Are you looking for an apartment or a house – or perhaps you don’t mind, so long as the potential growth in value is strong? Are you looking to renovate and ‘flip’ the property for a profit? Or perhaps you’re more interested in a long-term hold of the property, which will yield results as its value goes up over time? Have a clear understanding of what you’re looking for in a property, and what time, money, and effort you’re willing to invest in growing its value.
- Rental yield
If you’re planning on investing in a property over the long term, you’ll most likely be renting it out. Be sure to understand the average rental yield for your area (as well as the vacancy rate, as discussed earlier). Will your investment property be likely to attract a higher rental income with the help of a renovation, or a simple lick of paint? It is a good idea to speak with a property manager, and understand the ongoing costs of owning a rental property. From property management fees, to maintenance and more, these will be factors that you need to take into account. Keep in mind, however, that while your mortgage repayments are likely to remain relatively stable (taking into account fluctuations in interest rates, and the type of mortgage you opt for), rental prices tend to increase. Investing in a rental property could see your earning potential grow over the years, and allow you to consider investing in more properties.
- Enlist a buyer’s agent
There’s no better way to build a solid plan for your 2018 property investment than to enlist the services of an experienced professional. Knowing how to choose the best investment property for your circumstances can be complicated. A buyer’s agent like Porters House can take care of the hard work for you by doing the research and using their extensive list of industry contacts to find you the best deal. Ensure that you reach your 2018 property investment goals with the help of a buyer’s agent like Porters House.