Buying investment property is a particularly hot topic at the moment, especially in a falling market. Whilst it might seem like two different topics, buying a home for yourself to live in and buying and investment property have similar characteristics as they will both eventually sell at a profit with the right strategy. This fairly typical route to wealth is the old buy and hold strategy which is easy to understand. The benefit is that it’s not as volatile as shares or bonds, which makes it even more appealing to the average investor.
Investing in residentially sound areas has proven to be a good investment over extended periods of time. The general rule is that as long as you choose the right property and buy at the right price, it will generally prove to be a wealth establishing investment for you. However it is important that before you rush in and purchase any property you do your homework on it. This is essential to ensure you don’t lose money on your investment and end up in financial hardship!
Buying Investment Property in the right areas is really the key. The right area involves areas which are convenient for the majority of the population. This means near public transportation, in close proximity to shopping centre, and education facilities.
A number of expenses need to be accounted and taken into consideration when buying investment property. These are essential to be accounted for as they can be the sole determinant as to whether you have bought into a bad deal or not.
Buying Investment Property Expenses:
• Council and Water Rates
• Body Corporate Fees
• Legal Fees
• Building and Pest Inspections
• Stamp Duty
There are plenty more factors you can add to the list, and as you get more experienced you will formulate your own list of factors to take into account for any investment. The list really does goes on, and if you are like most investors and you have borrowed for the purpose of buying investment property, you will have interest payments to make to the bank. Just remember as well that it sometimes a requirement to fork out on rent received and you will almost certainly have to pay capital gains tax should you decide to sell the property. This is of course unless you learn the creative methods of working around this.
Therefore it is evident that buying investment property is a constant source of expense, and whilst it works, is not ideal for everyone. Therefore it is essential to do your due diligence and research in order to ensure you don’t make great mistakes.
Common Mistakes Made In Buying Investment Property:
• Underestimating contingencies
• Not accounting for any error factors
• Not doing your homework on a property
• Doing it for the sake of doing it
It is a consensus by the general population that buying investment property will make you rich. However it is important that you learn quickly that this is NOT the case. Buying investment property will not make you rich, but doing something with it will.
Here are 3 important tips to follow when buying investment property:
1. Write down your goals. Its simple, if you do not write it down it will not happen. It is step one of the process. Without setting a goal you will be entering the market blindly, without a real idea of what you want to achieve. The action of writing it down tells your subconscious mind what to achieve and does not make it an option but simply a reality.
2. Ensure you build a team. The old saying goes that TEAM stands for Together Everyone Achieves More. This is one hundred percent true. Use your team to help guide you to success. Without a team of professionals, you will become overwhelmed and make costly mistakes.
3. Gain a mentor. Why not just follow the footsteps of someone who is successful? A mentor can help fast-track your way to wealth quicker than anything else can. A mentor builds your knowledge, improves your confidence and can save you years of costly mistakes.
Just remember the worst thing you can do is nothing. There are great properties selling every day that you may or may not be grasping on to! So get out there, write your goals down. Ensure you build a specialized team and follow the footsteps of your mentor. Following these steps will ensure you are well on the road to buying investment property.
To your success!