Ever spent a dinner party wondering, ‘Why is everyone a property expert, except me?’ Investing in property can seem daunting, or even terrifying, from the spectator side of the fence, but don’t let your know-it-all friends scare you off. Property investment is pretty straightforward when you know the basics. Here’s a beginner’s guide to get you started.
1. Don’t rule yourself out of the game
This may seem obvious, but many dismiss property investment as an option before they’ve even taken stock of their assets. Take a thorough look at your finances and work out how much you have to spend. If you have a stable income and a good credit history, you should be able to get a loan of some kind - and a foot in the door to your first property.
2. Flex your buyer’s muscle
Before hitting the property pages or show houses, make sure you’ve been pre-qualified for a home loan. This will confirm to any sellers the bond amount you qualify for, putting you in a stronger position as a buyer. You can get this directly from your bank or from a trusted mortgage originator, who will help you apply for a bond at multiple lenders. May we recommend Rawson Finance for the job? Wink, wink.
3. It’s OK if you need a helping hand
Do you have someone who is financially strong enough to stand surety for you? It’s a big ask as they will need to agree to pay any bond repayments you fail to make, but it lowers the bank’s risk which makes them far more likely to approve your bond.
Another option is to go into the venture with other investors. This can be quite risky because if one person defaults on their portion of the payments, the responsibility will fall on the rest of you. But if you invest with people you trust, who you know are financially secure, your combined salaries will likely prove more than adequate for the loan criteria. (Tip: Be sure to have a thorough Partnership Agreement drafted by an attorney to cover your bases - just so that things don’t get too awkward if something goes wrong)
4. Make your investment bring home the bacon
There are many reasons why people choose to invest in property, but the biggest one is to get a good return on their investment.
The specifics of what this looks like will be unique to your requirements so it’s worth taking the time to think through what those are. By when are you wanting to see a return? Is this a five year strategy or a retirement plan? Once you have a clear goal, you can work backwards to make sure you buy the kind of property that will work for you.
5. Start on the ‘lower end’ of the home market
Next comes the fun, yet slightly nerve-wracking part. What type of property to buy and, more specifically, where to buy it.
If you’re wanting to dip your toes into the property market, a low priced residential unit, in an area where year-on-year house prices are increasing faster than inflation, might be the safest bet. But there’s no magic eight ball when it comes to real estate.
Read articles, ask advice from trusted sources, and do your homework. Getting an understanding for the market is the best way you can set yourself up for long-term success.
If the thought of signing on the dotted line still seems too daunting, why not flash ahead a few years to when you’re enjoying the benefits of that property investment? Maybe sipping a cocktail on a yacht? And, you never know, you may even be the one who all your friends turn to for advice over the dinner table. We all have to start somewhere. And we hope these tips have given you a good first few steps.
