The goal is to put money to work today and allow it to increase so that you have more money in the future. The profit, or return, you make on your investments must be enough to cover the risk you take, taxes you pay, and the other costs of owning the real estate, such as utilities, regular maintenance, and insurance.
- Choosing the right property at the right price
The key for you is to do your research, work out what everything is selling for in and around the area and then you’ll discover that soon you’ll become very good at working out what a property is worth – you’ll know a bargain when you see it. Never consider purchasing real estate in an area that you are unfamiliar with. It is also important that your property suits the demographics of renters in the area.
- Do your sums – Cash Flow is always king!
You’ll want to make sure that you can afford to maintain your mortgage repayments over the long term. Make yourself aware of taxes involved in property investing and add these into your calculations.
- Pick the right type of mortgage to suit you
Whether you choose a fixed rate loan or a variable rate loan will depend on your circumstances, but consider both options carefully before you decide. Each bank has different lending criteria, some of which may result in more favourable interest rates for you.
- Check the age and condition of the property and facilities
Before you purchase (and then once a year) to conduct a thorough inspection of the property to find any potential problems. It’s not always a bad thing to buy a property that is not in peak condition because you get the opportunity to improve the value of the property by fixing the place up and this can increase your returns for both capital growth and rental income.
- Make the property attractive to renters or potential buyers
You should buy a property that you’d be happy to live in yourself. Some people believe this will mean it is appreciated more and some people don’t care. Or you could have made upgrades to the property that make it more attractive to potential buyers.
- Take a long-term view and manage your risks
Remember that property is a long-term investment and you should not rely on property prices rising straight away. The longer you can afford to commit to a property the better. You shouldn’t be in this industry if you’re looking to get rich quick.