So, you may have found the investment property of your dreams and you’re ready to make the offer. While we’re not one to burst anyone’s bubble but there are a few questions to ask yourself before you jump in.
Property investment is a journey that includes a lot of sweat. However, the rewards are worthwhile. Before you make the leap and purchase your first investment property, ask yourself these four important questions:
What are your goals with this investment?
Even before you have found your ideal investment property, the first question you should be asking yourself is what you are hoping to achieve by entering into the property market. Are you looking to build a property business? Are you using the investment as a means to retire early?
Starting with an investment goal provides clarity on the steps you need to be taking to achieve it. Going in “blindly” will 100% ensure that you’re losing more money instead of growing.
What is my property strategy?
Once you determine your investment goals, the next step is finding the property investment strategy that will help you achieve your goals. The methods that most investors swear by are: Buy-to-let, Buy and hold and Fix-and-Flip. You could use one or multiple strategies. Some investors use a hybrid of two strategies (an example: buying a property, renovating, and then renting it out).
If you’re uncertain about which one is right for you, find yourself a mentor or speak to an expert to discover where they started.
What is my financial strategy?
The myth is that you need to be rich to step into the property investment space. Far from the truth but what you do need is a sound financial strategy and to ensure that your finances are in order.
As property experts will tell, there are many options available to you. The go-to option is heading to the banks for financial assistance. If you are doing this, there are a few things you need to consider. Namely, that all major debt must be paid – having a large debt could dampen your chances of securing a home loan.
Always do research and shop around for better offers. Once you have the numbers on hand, you can start doing comparisons and find which rates work better for you and your strategy.
Is this a good deal?
If you have been doing plenty of research, attending countless open houses and driving around searching for ALL the ‘For Sale’ signs; then anything seems like a good deal. However, you need to crunch some numbers and consider a few factors before putting in your offer.
Firstly, what condition is the property in? If it’s a fixer-upper, ask yourself whether they are overcharging you. Also, if it needs extensive renovations, how much extra would you need to bring the property back to life?
Consider the neighbour that the property is in. What is the average asking price of these properties? Does your property fall above or below this price?
You may think you have found the ideal property but it’s also helpful to take a magnifying glass to determine if you’re investing in something that is financially (and emotionally) worth it.
Seems overwhelming? It doesn’t have to be. Entering the property business is a worthwhile venture but as with any business, you’ll need good people in your corner. Sign up for the Riches and Beyond free webinar to start your property education journey.