Purchasing an investment property remains as one of Australias favourite ways to invest. An investment property should be about increasing your wealth and securing your financial future. There's however, a common misconception that property investing always offer positive returns, while this is true more often than not it definitely is not an instant road to riches. You need to bear in mind that how efficiently you manage your investment will determine whether the investment helps you reach your financial goals. The cost of owning an investment property can be surprisingly low after you take into consideration your rental income and the tax reductions you will be entitled to.
Watch our two part video series to see our top 10 tips for buying an investment property or view an infographic summary of our top 10 tips here. Choosing the right property at the right price - 2. Do your sums Cash Flow is always king! - 3. Find a good property manager and let them to do their job - 4. Understand the market and the dynamics where you're buying - 5. Pick the right kind of mortgage to fit you - 6. Use the equity from another property - 7. Negative gearing - 8. Check the age and condition of the property and facilities - 9.
Make the property attractive to renters - 10. Take a long term view and manage your risks - 1. Choosing the right property at the right price - Investment in real estate is usually about capital growth, so choosing a property that's more prone to increase in value is the most crucial decision you'll make, so buying at the right price is absolutely critical. Unlike buying shares where the value of a company is transparent, real estate is more challenging to price, this however provides you with an opportunity to acquire a resource below its real market value if you're patient and knowledgeable.
The key for you is to do your research, work out what everything is selling for around the area and after that you will discover that soon you will become very good at working out what a property is worth you will know a bargain whenever you see it. Never consider buying real estate in an area that you're unfamiliar with, especially when you're approached by real estate spruikers marketing interstate or offshore properties, some of those real estate marketing companies are paid very high commissions leading to the price of the property being hugely inflated. Whatever you do, never make a decision to purchase an investment property based on getting a tax deduction always concentrate on making the right investment choice. Making sure that you've a steady rental income stream is also vital because this cash flow will make the holding of the asset more affordable and provide income. Different classes of residential property home units, houses and land can outperform each other with time.