Things to consider when investing in property

Creating an investment plan.

Every successful financial decision begins with a plan and investing in property is no different. That's why it's so important to get your strategy right from day one. Here's how:

  • Understand your current situation
    Knowing what assets and liabilities you have will give you a better understanding of your current financial situation. Once you know that, weigh it against any investment property ownership experience you may have and your life stage, so you can figure out what kind of investment you're ready for.
  • Set your property investment goals
    When it comes to property investment, one of the most important questions you can ask yourself is why you're doing it in the first place. Focus on this and set your goals, because it'll help you face any challenges that present themselves in the future.
  • Capital Growth or Rental Income?
    If your goal is to make long term gains, then focusing on the increase in your property's value over time (capital growth) may be the strategy for you. Plus, you may also be able to benefit from negative gearing. However, if your goal is to have a regular income from your investment you might want to consider renting out your property. As you'll be receiving a rental income you may not have to borrow as much and therefore your repayments may be lower.

Choosing an investment property.

To make your investment a success, you need to buy the right place, at the right price, at the right time. And that all boils down to one thing - research. Once you know where you'd like to buy, get to know the market in those areas. Understanding vacancy rates, sale prices, rental rates, current and future infrastructure developments and projected population growth will help you predict how your investment will perform, both now and in the future.

If you're looking to invest in a rental property, you can record the things you do and don't like about a house you've inspected using our Landlord's Checklist. It'll also give you tips on what to keep on eye on, such as the fixtures and fittings.

Finding the right investment loan.

Just like a residential home loan, you can choose either fixed, variable or split interest rates for your investment loan, with flexible features such as redraw. In general though, investors often prefer Interest Only and Line of Credit loans.

Finding tenants to suit you.

When you're ready to invest in a rental property, you should also consider the type of tenants you'd prefer. The tenants your property will attract will mainly depend on its size and location, but the condition of the property and its facilities also play a part.

Once you've weighed up who you'd like and who your property will suit, it's time to maxmise the appeal of your property to this particular market. The best way to do that is to find a real estate agent who understands your area. They'll be able to help you with ongoing management of the property and tenants too.  It's also important for you to familiarise yourself with your legal rights as a landlord, so you know where you stand.

Landlord's checklist.

To keep track of your property's condition during tenancy, use our Landlord's Checklist.

Just make sure both you and the tenant fill out the report at the same time.

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