Property Investment Checklist

Property is a tempting investment for many right now. Interest rates are at record lows and household wealth is resoundingly healthy.

So how do you know if you’re in a financial position to invest in property?

Investment property expert Chris Gray has devised this checklist to help you assess whether you’re ready to buy your first investment property.

Crows Nest property


Counting the coins

First up, work out how much debt you have, how much you need to borrow and how much you can spend.

“You’re generally right if you’ve got money to buy now and money for cashflow,” Gray says.

“Have 20% for a deposit, 5% for stamp duty and legals and ideally, a bit of a buffer.

“Allow for about $50,000 for future cashflow so that even if you can’t afford to pay costs from wages, you’ve got this fund to back you up.”

 

Plan, plan, plan    

Property investment requires a serious time and hefty cash commitment. Gray says the way to success is to be thorough in your research and preparation.

“Really, you need to treat property investment like a business,” he says.

There is a wealth of property investment information online, in books and on television, he says.

Gray advises investors to be supported by a reliable team of professionals.

“You need a team of advisors around you – your mortgage broker or banker, accountant to tell you how to structure the investment, financial planner, valuer and a builder to help with renovation quotes,” he says.

Young couple in apartment


Don’t sit back & wait

Many would-be investors tend wait for the perfect time to dive into the property market. Unfortunately, there is no such thing, Gray says.

“It’s more about if you’re ready, rather than if it’s the right time in the market,” he says.

“A lot of people are trying to find the right time – high capital growth, high rent, easy to borrow from the bank, low interest rates and easy to find property.

“It’s like an impossible equation because there’s usually one to two of these things missing.”


Be prepared for the unexpected

It’s impossible to predict the future, but it’s advisable to prepare for the worst-case scenario.

Interest rates may rise, tenants may leave you high and dry and expensive fees, such as special levies by body corporates, may be just around the corner.

Interest rates are historically low, but Gray says investors should not plan on them staying the same.

“Always assume interest rates are at 7 or 8% so if they are lower, just think of it as a bonus,” he says.


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