Tips for investing in property

As with investing in any asset class you should do your homework before jumping in. Like most things get it right at the start with careful planning and research and a sound strategy can pay off. Choosing the right property in the right location is a sure way to make your investment really work for you.

Here are some of the basic tips to help you with property investment.

Think Long Term.

Whilst not an exact science the housing market is generally a 7-10 year cycle. During this period there are peaks and troughs with some relatively stable periods. Picking the bottom of the market is difficult however by thinking long term the effects of the peaks and troughs are minimised. In terms of borrowing, being comfortable is crucial; planning should involve building in potential rate increases, having enough cash flow to deal with tenant vacancies and expenses like rates and knowing your financial goals such as having an exit strategy.

Seek the right advice.

It makes sense before setting off to buy your first investment property that you get the right investment advice to make sure that your financial situation is improved. To maximise your investment do your research and speak to qualified professionals.

You should cover off on the following:

  • 1. The minimisation of Tax
  • 2. Potential capital growth of the investment.
  • 3. Tax Variations – to assist with cash flow.
  • 4. Benefits of Negative Gearing & Positive Gearing.
  • 5. Capital Gains Tax implications.
  • 6. The right Investment Home Loan.
  • 7. Vacancy rates.

Also invest your own time to become an expert on the marketplace. Understand property values by going to Auctions and Open for Inspections, find out average rental yields from real estate agents and take into consideration any Council plans for upgrades to services or improvements in infrastructure in the area. Get this right and the difference to your investment return could be significant.

Specialise.

Choose the one type of real estate asset and become an ‘expert’ in that particular type of investment. Don’t bounce back and forth between different types of property (renovating, developing, holiday homes etc.) By specialising in the one type of property you avoid making costly mistakes that are made during the ‘learning curve’. In addition to this you become more and more accomplished in your chosen area of expertise with each new transaction.