Australia's real estate market offers a wide variety of investment opportunities and the potential for strong returns. As a first-time property investor in Australia, making informed decisions about your investment is essential for a successful and profitable investment journey. To help you navigate the world of property investment for the first time, here are 5 top tips, from choosing the right property to managing your investment effectively.
1. Buy well to start with
The key to any successful property investment journey lies in finding the right property in the right location at the right price. Here are some factors to consider in your search for the right investment property:
- Location: Look for areas with high rental demand, good infrastructure, and potential for future growth.
- Property type: Choose properties that appeal to a broad range of tenants, such as apartments close to public transport or houses in family-friendly suburbs.
- Price: Buy at a competitive price. Conduct thorough research to gain an understanding of the market. Compare recent sales in the area and negotiate effectively.
2. Choose an investment strategy
Most property investors choose to invest for one of two reasons, and your investment strategy will guide your property selection and property management approach.
- Buying for capital gain: Capital gain is when the value of a property increases over time, allowing you to use the equity (the difference between the value of the property and how much debt you owe on the mortgage) to finance things like buying another investment property, going on holiday, renovating your home or buying a new car. Or you may choose to sell the property to return a profit.
- Buying for cash flow: Cash flow is the rental income you receive from renting out the property to a tenant. If the rental income covers your costs, such as mortgage repayments, maintenance costs and property management fees etc., the property essentially provides an additional source of income that can be used for discretionary spending, to pay bills or help pay down debt on your family home.
3. Treat it like a business
When it comes to investing in property, approach your decisions with a business mindset, using logic and financial analysis rather than emotions.
- Stick to a financial plan: Set a budget, forecast your potential returns, and plan for expenses.
- Take the emotion out of decision making: Avoid choosing properties based on personal preferences. Rather focus on what will attract tenants and generate the best returns.
- Maintain stringent financial protocol: Keep detailed records of all transactions and expenses related to the property.
4. Understand your rights and obligations as a landlord
Being a landlord comes with a number of legal responsibilities and it’s essential you familiarise yourself with your rights and obligations to ensure compliance and avoid any disputes.
- Understand the Residential Tenancies Act in your state or territory, including the rules around leases, bond, rent increases, and eviction processes.
- Ensure your property meets all safety standards, is well-maintained and conduct regular inspections and timely repairs.
- Communicate clearly and fairly with your tenants and address their concerns promptly to foster a positive relationship.
5. Get a team of experts on your side
Managing an investment property as a first-time property investor can feel overwhelming. So surround yourself with professionals who can provide valuable advice and services and help make your property investment journey smoother.
- Get financial advice from a mortgage broker who can help you secure the best financing options for your investment property.
- Hire a property manager, such as those at Harcourts Property Management, to take care of the day-to-day responsibilities, including tenant screening, rent collection, maintenance, and legal compliance.
- Enlist the services of an accountant to help you navigate tax implications and ensure you maximise your investment returns.
Get ready to invest in property
For more tailored advice on financing your first investment property or growing a property portfolio, get in touch with a Mortgage Express mortgage broker near you.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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