Are you feeling overwhelmed as a first-time property investor?
Here are four tips to help you start off on the right track:
1. Ensure Sufficient Capital
Investing in property usually demands a bigger deposit compared to buying a home for personal use. To streamline the process of making an offer and securing an investment loan, determine the deposit amount needed for your target price range. Additionally, if you’re using the equity from your primary residence to finance the investment, keep in mind that you can borrow a maximum of 80% of the property’s value.
2. Evaluate Land Value
Buyers and investors frequently dedicate significant time and energy to the specific property they wish to acquire. While it’s essential to ensure the building is in good shape and attractive to potential tenants, the land itself is also a crucial factor. Targeting properties in prime locations with a low risk of oversupply can contribute to future capital appreciation. In short, although the immediate tax advantages of investing in new properties may seem attractive, opting for high-quality properties in desirable locations can be a smarter long-term strategy.
3. Assess Your Risk Tolerance
Like any investment, holding an asset comes with varying levels of risk. Generally, assets with higher risk can offer greater rewards. It’s essential to recognise your risk tolerance and tailor your property investment strategy accordingly. For instance, you might be comfortable with the fluctuations associated with holiday rentals in coastal areas. On the other hand, if you prefer to avoid the risk of low or no rental income during off-peak seasons, investing in an urban area that attracts a diverse demographic might be more suitable. There’s no definitive right or wrong approach; it’s about aligning your investments with your long-term goals and individual risk tolerance.
4. Obtain Landlord Insurance
Unexpected events can occur, such as a tenant failing to pay rent, damage to your investment property, or a tenant breaking their lease. Landlord insurance protects you in these situations and more, ensuring that if you face losses from covered incidents, you won’t suffer significant financial setbacks. Some policies are available for as little as $1.50 a day, making it a valuable investment for managing the risks associated with owning rental property.
Embarking on your property investment journey involves considering many factors. From determining your budget to setting long-term goals, conducting thorough research and consulting qualified experts is essential. If you’re new to this, use the tips mentioned above as a starting point to pinpoint areas where you need guidance and assistance.
Remember, this article is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.
