18 Oct Buying an investment property: 5 things to consider
One of the most popular investment vehicles available to Australians today is to purchase investment properties. Before you do become an investor, it is however really important to ask a few questions of yourself to make sure that the decision is the right one for you:
Why Are You Buying The Property?
One of the biggest mistakes first time property owners make is to treat the places they rent as though they were going to live in them. You need to be very clear that a rental property is for renters, if you want it to work as an investment.
If you understand that it’s not for you – it’s easier to separate your own tastes from market tastes and make decisions based on what’s attractive to renters and even future purchasers of the property. Location, location, location, is the key here.
Can You Really Afford It?
When banks and financial institutions take a look at your mortgage paperwork, they’re going to be asking – “can you afford this?” That’s not just “can you raise the deposit” but “can you pay the mortgage if the place doesn’t have a tenant for a few months?”
This is important for you too not just the bank. After all, if you can’t afford it and things go wrong, you’re going to lose the property. It’s vital to understand your finances before you sign anything, talk to your mortgage broker, if you aren’t sure.
What Are The Hidden Costs?
It’s not just the mortgage that needs paying. It’s the rates, the maintenance of the place, the taxes, the water, electricity and gas, and possibly even building fees for apartments. You’re also going to need to insure the place.
If you intend to lease the place as furnished, then furniture costs come into play too.
Put together a budget based on all your costs and it’s easier to know if you can really afford a place or whether you should choose a slightly less expensive property.
Have You Got An Inspection Done?
While the seller will have to provide some information about the property you want to buy, it can pay huge dividends to get the place independently inspected. You don’t want to find that the walls are lined with asbestos or termites after the property changes hands. More mundane items like finishing or damp patches need to be taken into account too.
Have You Researched Rents?
Go to more than one local agent and find out how easy places are to rent and how much you might expect. Get a good idea of what the market feels like at this moment in time. What are the expected occupancy rates (the number of months that you might have the property rented for each year)?
Think You’re Ready To Make Your Investment?
If you’ve been through these questions and you think that you’re ready to make an investment in property then it’s time to call us at Aspirus Financial Services. We’ll help you find a suitable mortgage and review your financial situation to try and help ensure there are no problems further down the line.