Investing in property: what you need to know

You’re ready to take your next step on the property ladder and buy an investment property. This is huge! But it’s probably got you questioning a few things. Do you know when to make the leap? Is it the right move for you? Before you rush in, here are a few things to consider over a cuppa first.

Can you afford it (No, but actually?)

It could be a renovator’s dream or the deal of the century, but if it’s going to push you to your limits to make the repayments, ask yourself: is this the right investment for me?

As well as the cost of the property, remember the other expenses of buying (like stamp duty, legal fees and building reports to name a few) as well as ongoing costs (a few examples include – interest repayments, any strata fees, and council and water rates).

The long-term capital growth of a property could make it a smart investment for your future, but adjusting your lifestyle in the present to accommodate your repayments might be a bit stressful. To help make sure that you don’t over commit yourself, do a thorough number crunch and consider giving yourself a buffer to allow for any surprise expenses – because, let’s face it, they’re going to happen whether we like it or not. At least this way you’re prepared.

Do your homework

Okay, you’ve found a place and the numbers work for your budget – but how well do you know the neighbourhood? When you’re looking, experts may advise you to choose a location that has a history of strong capital growth. If you’re not familiar with the property market, consider enlisting the help of a professional.

Remember, you’re looking for something that’s rentable, not your personal dream home. So you’re better off choosing a property with broad appeal and features that could make it easier to rent out.

Another thing that could be worth looking into is whether you can add value to a property through renovation or redevelopment. If people are starting to revamp other houses in the area (but there are still plenty of original… how do we put this… ‘ugly ducklings’), this could indicate good investment potential.

Expect the unexpected

Setbacks are a reality. That’s why all the best advice will likely tell you to factor a buffer into your budget. Don’t kid yourself by thinking that once you’ve secured your investment you can just sit back and watch the value climb: unexpected things – like tenants moving out or strata fees going up – do happen. Having a plan for setbacks could help you access the cash to get you through.

It’s a marathon not a sprint

When it comes to property investment, having a long-term strategy will set you up for success. Investment properties aren’t a get-rich-quick tactic. They’re a commitment. Prepare yourself to play the long game and make sure you’re all set up to hang onto your investment for around ten years or more (depending on your circumstances).

How much can you borrow?

Are you ready to discover your borrowing power? Try our ING borrowing power calculator to find out an estimate of where you stand.

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