Finding the perfect time to become a property investor is not easy, yet many investors get caught up in the fear of buying at the wrong time. The truth is that when to buy is not nearly as important as actually buying a property, particularly if you are planning to hold onto it long-term.
As long as you plan to keep your property through the good times and the bad, you needn’t worry too much about temporary shifts in prices because it is still likely to end up being profitable in the end.
Decide on your strategy
Write down your goals for property investment, do you want to become a landlord or would you rather renovate and sell properties? Do you want a positive cash flow property, a high capital growth property or a balanced investment? Be clear on what you are seeking to achieve and what type of property fits your strategy.
Get your finances in place
Your finances should be in place before you go shopping for an investment property. Ask your mortgage broker to obtain a pre-approval for a specified purchase price, which will narrow down the most suitable areas for your research efforts.
A property investor must research
As an investor you need to use statistics to not only find the right suburb but also the right property within the suburb. Look for areas with low vacancy rates, broad buyer and tenant appeal, high employment and good transport links.
Think with your head not your heart
You need to be ready to put your emotions aside and think like an investor, not a home owner. The property you buy doesn’t need to be one you love, or even particularly like, as long as it meets the needs of the rental market. You also need to be detached enough to walk away from the property if the deal doesn’t work out the way you wanted.
Measure your risk tolerance
Events such as a major repair, employment change, extended sickness or sudden interest rate rise could put you in an uncomfortable financial situation. Make sure you are ready for the ups and downs of investing to make sure that your journey as a property investor is a long and profitable one.
Seek out experts
By talking to experts you will be able to avoid many of the pitfalls that inexperienced investors meet. Loans for an investment property are different to regular home loans in terms of the options you the property investor have. For instance, you may be able to make interest-only repayments for some of the loan term, and get the rental income the property generates taken into account for the potential to borrow more. Get your mortgage broker to provide quotes from at least 3 different lenders.