If you’ve made the decision to invest in property you’ve probably done your due diligence in making sure it’s the right choice for you. If you’ve considered shares, stock market or gold and decided property investment is for you then let’s look at how to get into the right head space and especially what you need to look before you get financed.
Here’s what you need to do/know before you do your finances:
- Contrary to popular belief less than 6% of Australians, or roughly 1.3 million people, own an investment property, this is important to recognise.
- List your assets, including you and your partners (if relevant) income. Make sure you include what your current expenses are. This will help you understand how an investment property will affect your own cash flow.
- Set you goals. Consider what you want? Do you want to positively or negatively gear this property, find out the pros and cons.
- Do your research in the areas you’re thinking of investing in. Are they saturated? Are there any big plans for infrastructure nearby, this is both a positive and a negative. Building works for 2 years could lessen your property but a new train station would increase its value.
- Make sure you have reconciled your risk. Understanding your own attitude towards risk will help you when deciding what property to buy.
- Start budgeting, yes sounds boring BUT budgeting is the only way to balance your incomings and outgoings, and lenders love to see the work you’ve done to present yourself a lower risk than others.
- Stay focused, it’s easy to get caught up in the emotional roller-coaster of home purchasing but take the emotion out of this, it’s a business transaction so treat it as one.