If you’ve ever wondered about the safest, most stable investment that you can make, the answer is really simple – it’s real estate. Of course, property investment is among the most expensive types, meaning that you want to avoid making mistakes from the get-go – the learning curve here is far from forgiving. For this reason, we’ve rounded up some awesome property investment advice that will help you nail it from the beginning. Whatever you do, do not miss out on the Aussie real estate market!
Choosing the location
Although many rules of real estate have undergone substantial changes, until they invent a teleport or something, one rule will always apply: location matters hugely. The main difference between buying a home for personal purposes and investing into a property (regarding location) is that you shouldn’t be looking at your own interests when investing into real estate – you should be aiming at satisfying the typical buyer.
As a rule of thumb, you should always look for the worst house on the best street, because reputation is a huge factor here. Another reason why buying in this way is so awesome is the fact that it gives you an irreplaceable opportunity to build equity. You cannot change a home’s neighbourhood, but you can work on the home itself! In the world of real estate investing, this is called “fixing and flipping”, and it is more than efficient!
Always follow logic
Regardless of whether or not you’ve ever bought a home, you’re going to want to use emotions when making the final decision. This is perfectly fine for making a personal purchase, but if you’re thinking about buying a home as a financial investment asset, you should refrain from using your heart, and always use your brain instead. Perhaps the number one “rule” of investing into property is: do not let your emotions cloud your judgement. The key here is analytical research. Think in terms of gains and returns; ask yourself whether the location in question is good for attracting quality tenants. Will that particular home appeal to the current owner-occupier market, where property prices are sustained in the long term? When investing into property, logic is the only right way to go.
Never, ever dive in
…unless you enjoy the risk. Sure, dive-in situations might end up being more than profitable for you as a future property owner, but the more likely scenario is that you’ll be left with your pockets turned inside out. Acting impulsively is rarely a good idea, mainly because being in too much hurry negatively affects your proverbial vision. Don’t be someone who attends one seminar and buys into the first ridiculous scheme they’re fed with – seminars are awesome, but you really need to filter out the advice you get, and filtering takes time. Don’t be the person who gives up immediately, either – the fact that you didn’t get rich overnight only means that you’re on the right road towards gaining knowledge – the only solid way to profit.
Check your credit report
Let’s face it, unless you’re really wealthy, you probably won’t be able to afford cashing out the entire investment out of your own pocket; chances are you’re going to need a loan. Well, the most important thing when it comes to taking out loans is your credit report – if there are any mistakes here, you need to get them in order immediately, and if there are legitimate problems involved, you’re going to need to do a lot of work in order to improve your credit.
Essentially, banks aren’t likely to readily loan you money on bad credit, especially if it’s not buying your own future home. Your credit report really needs to be spectacular. Now, although these things aren’t nearly as complicated in Australia as they are in the US, you’re still likely going to need help. For instance, businesses such as Aus Property Professionals specialize in helping you buy an investment property and offer flat fees for doing what needs to be done for fixing your credit, from a property investor’s viewpoint.
Stick to the 1% rule
In the most likely scenario, you’re probably buying a property that you plan on renting out to multiple tenants. Using the “1% Rule” is the king in figuring out whether the property is worth the price that you’ll pay. What is the “1% Rule”? Well, it simply states that a property that is supposed to produce income must produce at least 1% of the price you pay for it on a monthly basis. Here’s an example: if the property you’re looking to buy costs $100,000, then the monthly rental income should be at least 100,000 multiplied by 1%, which equals $1,000. You need to be aware of this before investing.
Property investment is everything but easy. It’s a tough world out there, you’re probably going to need to break your buck in order to obtain one, plus there are tons of potential problems that might arise. However, real estate investing can potentially result in awesome returns, so it’s well worth at least looking into!