Investing in property is a proven strategy for building wealth, but it requires expertise and guidance to be successful. Here are ten essential questions we recommend to budding investors starting their journey.
1. What are my investment goals?
The cornerstone of your property investment strategy lies in defining your investment goals. Ask yourself, “What do I want to achieve with my investment?” Do you seek long-term capital growth, consistent rental income, or a combination? Your investment goals will shape your strategy and dictate the property type, location, financing, and management of your property.
2. What’s my budget?
Determining a budget for property investment goes beyond the purchase price. Include additional expenses like property taxes, legal fees, property management fees, water bills, and ongoing maintenance in your budget to prepare for any unforeseen financial challenges.
3. Where should I buy?
“Location, location, location”—it’s more than just a saying. Choosing the right location is vital for your property investment’s success. Look for areas with potential for property value appreciation, proximity to amenities (like schools, shops, and transport), and low vacancy rates.
We can help you analyse the local property market, considering population growth, local job opportunities, infrastructure developments, and economic stability.
4. Determining Property Type
Different types of properties carry various levels of risk and reward. Apartments, townhouses, dual-living, and free-standing houses have unique factors to consider. Your investment goals should guide this decision, taking into account factors like maintenance, rental income, and property management fees.
5. What type of property should I invest in?
Stay informed about the dynamic property market by asking questions like:
- Is the market favourable to buyers or sellers?
- Are property prices trending upward or stabilising?
Understanding these trends is crucial for informed decision-making. At Hendrix & Hart, we are experts in evaluating market conditions and providing valuable insights for our clients.
6. How will I finance this investment?
Financing your property investment is a substantial consideration, so consult with a financial expert to explore borrowing capacity, interest rates, and loan options. They’ll help devise a suitable financing strategy and prepare you for potential rate adjustments along the way.
We work alongside a reputable industry partner in financing who can help you answer this looming question. They’ll also help you understand the impact of rate fluctuations so you can formulate a plan to prepare for potential rate adjustments that may arise along the journey.
7. What’s the rental potential?
If generating rental income is a primary goal, research the rental potential in your chosen location. Analyse the local rental market, demand, and potential rental income to ensure your investment is financially viable.
Our industry-partnered property managers can address all your questions about rental income.
8. What about tax?
Property investment involves tax considerations, such as capital gains tax and deductions. Having a clear understanding of these factors is crucial for financial planning.
9. Property Management Choice
Decide whether to manage the property personally or opt for a professional property manager. Property management includes tenant screening, rent collection, maintenance, and compliance with regulations. While managing yourself may save some money it will come with a sizable investment of time and effort.
10. Planning Your Exit Strategy
Your initial plan may be long-term ownership, but it’s essential to be prepared with an exit strategy. This could involve selling the property, refinancing it, or passing it on to heirs. An adaptable exit plan ensures informed decisions throughout your investment journey.
Property investment is a long-term commitment, and with the right knowledge and guidance, you can make informed decisions that lead to financial success. Explore these essential property investment questions to kick-start your journey.
The information provided in this blog is intended for educational purposes and does not take individual circumstances into consideration; for personalised advice and information, please contact us directly.
