When it comes to buying an investment property in Australia, the key is to ensure you are well informed. While using the services of a specialist in property investment is a good idea, it also means doing your own research as well instead of relying on other professionals to make decisions for you.
Below are some common errors new investors or investors can make.
Lack of Proper Research
Look at multiple independent sources for price data, and information about suburbs and local markets. Don’t just look at prices either; find out all about the amenities, vacancy rates and historical values of properties in the area. Getting the hang of the cyclical nature of the property market is a difficult task that requires time to get to know the area you intend to invest in.
Ensure you look into anything else that might affect property prices. For example, look at the supply and demand of certain property types, whether there are any upcoming infrastructure projects in the area, and any government policies or business activities that might also influence prices.
Most importantly, don’t make any decisions based on emotions. Buying a home may be a meaningful decision, but an investment property should be purchased based on analytical research.
Buying the Wrong Property
An outcome of not following the previous step will generally lead to this major investment mistake. Without proper research, you can get swept up in short term speculation rather than focusing on long term strategy. You can also buy the wrong property in the wrong area.
For example, you’re in trouble if you’ve just bought a two-bedroom apartment in an outer suburb full of families who require larger family homes. Ensure you know the demographics and needs of the area and take advantage of it.
Poor Financing
Obtaining the right kind of finance can save you thousands in loan expenses over the years. The best option is to get financing through a qualified mortgage broker who can compare home loan products and advise you on the best option for your circumstances and financial goals.
Make sure you understand the various tax benefits and costs related to purchasing an investment property so you can take advantage of them and account for them in your planning. These include:
- Costs of acquiring property e.g. stamp duty
- Capital gains tax
- Negative gearing
Don’t find yourself in a position where you’re struggling to manage your cash flow once you’ve purchased the property. Ensure your account for contingencies like vacancy periods and maintenance costs.
Attempting Self-Management
Inexperienced property investors sometimes think that self-managing their investments will offer a good way of boosting their profits. Don’t underestimate how much work is involved. You’ll have to find your own tenants and act like your own property managers by organising the collection of rents and arranging maintenance.
You’ll also have to have a firm grip on the value of your rental, understand laws relevant to rentals, conduct regular inspections and represent yourself at tribunal should a dispute arise. Once you have a portfolio of multiple properties, this amounts to a full-time job. It’s far better to pay a professional property manager to handle it for you.
Need Help with Investing?
If you’d like advice or services relating to buying and managing investment properties in Australia, speak to the experienced team at H&T Realty in Sydney. Call us today + 61 737 320 388 or contact us online.
