In an unpredictable economy, buying an investment property is an excellent way to invest your money – there’s a reason for the old saying – “safe as houses”. It’s important however that you don’t take any decisions lightly when it comes to spending large amounts of money on property. Utilise useful tools like the Property Investment Calculator and take the time to fully plan out your investment and avoid expensive and stressful mistakes.
Be Prepared
Don’t assume that the money is going to roll in straight away. Investments are generally profitable however they do take time and hard work. Make sure that you’re completely clear on exactly how much you have to invest and figure out a budget that will work for you. Do your research and find out what tax deductions you’re likely to be entitled to and factor these into your plans also.
You should also do a thorough check of the home before purchasing and ensure the house doesn’t need any Adelaide roof repairs!
Value is everything
The main purpose of an investment property is to make money. It’s therefore essential that you choose a property that is likely to increase in value – this could mean looking in an up and coming area, or it could simply mean buying the property at a good price.
You’ll also need to look at the potential rental income you can achieve from the property and factor this into the amount of money you expect to make. Do as much research as possible about the market and the current values of properties and which areas are most profitable.
Think Long Term
You need to view buying an investment property as a medium to long term investment. Don’t expect to make huge amounts of money immediately and consider this when working out how much you’ll be able to pay back in the early stages. It’s not worth investing beyond your means and leaving yourself open to financial struggle in the immediate future. There are always ‘hidden’ costs you have to remember also – including agent fees, insurance and land tax.
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DIY or hand it over?
The chances are that you won’t be living in your investment property – therefore you’ll need to make the decision whether you’re going to handle the day to day running of it (including finding tenants and managing them) or whether you want to hand this over to a property management company. Unless you’re up to date with the latest legal, tax and admin requirements, it can save you time and money to appoint a manager for your investment property.
As long as you’re as fully prepared as possible, investment properties can be an excellent and profitable option for investing your money. Wide research and careful planning are essential before you make any decisions so give yourself some time and you’ll be rewarded for it later.
Further reading: Australian Securities & Investment Commissions -Money Smart Property Investment Guide