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Between understanding your finances and knowing when, where and what to buy, the whole experience can be daunting.  If you’re feeling overwhelmed- stop right there!

We’ve compiled tips to ensure that your investment property brings you the rewards you’re looking for.

Calculate your costs

Buying an investment property is a major financial responsibility. The first factor to consider is how much you can actually afford.  It is important to remember that buying an investment property means more than just the cost of the mortgage, you will also need to factor in expenses like repairs, improvements, real estate fees and landlord’s insurance. If you’re purchasing a property with a body corporate, they will also have fees that need to be added in.

If you want to find out how much you can borrow, we recommend having a chat with a broker who can guide you. We’ll be able to let you know the maximum amount you can borrow and will discuss all of the potential costs involved. We may also connect you with right people (accountants, financial advisors, property advocates etc).

Have a backup plan

While a tenant paying rent can help to cover some the costs involved with an investment property, there may be times when the property is left vacant. Having a contingency to cover these down times is important. Research the costs involved in your situation to ensure you are getting the best deal for your money. This can help when considering lenders and insurance providers, too.

Buy with your head, not your heart

Once you have all the costs sorted, the next step is considering what type of property you would like to purchase. Be sure to leave your emotions at home! Remember that this property will not be your ‘dream home’, or the home you want to live in.

Put the focus on location, with good access to public transport, shops and schools. Consider the pros and cons of buying a brand new property or an older property.  If your budget is too tight for a house, look at units and townhouses in the area. Always good to test your requirements with a broker and an accountant or a financial advisor. Finance Circle Group does not provide financial advice.  

Timing is everything

Buying an investment property is all about timing. It’s recommended you buy when prices have dropped and just before a price rise. Keeping your eye on the market is important so that you can gauge the best time to buy and the right time to sell. You also need to consider your preferred investment strategy – will you take a long-term view or will you aim to turn it over in a few years?

Get good advice

With such a major life decision at hand, it’s a great idea to ask for advice. Reputable financial planners, your accountant and a solicitor (especially if you’re buying jointly with a friend or family member) can all be great places to get the information you need to make the right decisions about purchasing your investment property.

Sometimes well-meaning family members will try to influence your decision. It’s important to look at their success, or lack thereof, with a property before you follow their advice. Beware of those who claim to know everything but haven’t been able to make it work for themselves. If in doubt, always seek guidance from the professionals such as real estate agents who really know the market, a broker who can assist with finance, and an accountant; can talk honestly with you about your needs and objectives.

What’s the right loan for me

Do you choose a variable or fixed rate? Interest only or interest and principal? Finance Circle Group (Brokers in Melbourne) will work with you to help you find the most suitable home loan for your investment according to you needs an objectives.

Useful reading:

Interest only or interest and principal

Fixed vs Variable home loans

Do you research. Money Smart web site is another good avenue.

Ready to build your investment portfolio?

Give us a call or drop us an email and our friendly and helpful staff with assist you.

This blog post is for general information purposes only and is not intended as financial or professional advice. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product or other professional advice. You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article.