Property investment can be quite intimidating, especially for first-time investors. With some research, we have composed and answered the top 10 questions asked we receive from our subscribers.
We hope you find it helpful.
1. Where do I start?
First time investors should start by getting a financial check up to help you determine your borrowing capacity and set your property investing goals.
After this, it's time to choose a investment strategy which is best suited to you. Strategies include Cash Flow, Renovation, Capital Growth, Subdivision, Off-the-Plan, Discount or Holiday Home.
2. Which strategy is for me?
All strategies listed above are used to create profit, however for first time investors, a low risk, buy and hold strategy is best.
First time investors starting with this strategy will cause less stress.
3. How much research is needed?
Property investment can be quite overwhelming, therefore seeking professional advice is always a good idea.
Real Estate Investar's blog and news are constantly updated with investor articles, including inforgraphics outlining Top Yielding suburbs, Highest Renovation SuburbsSuburbs with the Biggest Turnaround in Median Priceand Australia's Smarter To Own Than Rent Suburbs.
4. Should I seek a mentor?
Seeking professional advice can burn a hole in first time investor's pockets! A mentor can be someone you trust and has had success in property investment, alternatively first time investors can take advantage of our newest service, The Concierge Service
This service is an easy, proven way to invest in property. With a Real Estate Investar Concierge Portfolio Manager and help from our 3rd party partners will assist in executing the plan and completing the steps needed to obtain an investment property, within six months.
5. Which property is for me?
This will also depend on the investment strategy you are using. However, for a first time investor a ideal property which has minimal maintenance or tenant issues, also taking into consideration in area's with positive cash flow, strong growth and positive rental yields.
6. Is it expensive to start investing?
When purchasing a property, first time investors will usually require a deposit. A bank or lender will need a deposit of 10% - 20% of the property purchase price, a investor will also have to consider the plus costs of 5% for stamp duty and legal fees.
For some more help, see our 7 Budgeting Tips for First-Time Property Investors
7. Are positively or negatively geared properties best?
The gearing of properties is influenced not only buy the investor and deposit, also the current interest rate, rental yield and tax rate.
Properties in which cashflow is positive after tax refund is best as the tax refund will be higher due to depreciation claims.
8. Property investment risks?
All types of investment come with risks, however the bigger risk is not investing and ending worse off. Property investment risks can be minimised by being financially ready, strategizing correctly, researching and seeking help from mentors or property investment experts. Read more here - 4 Inherent Risks of Property Investing.
9. Vacancy rates
To ensure your property always has a tenant, doing intensive research into vacancy rates within the area. It is best to purchase properties where vacancy rates are low, and buy the properties that are in high demand.
10. What about the constant movement in interest rates?
Now the interest rates are hitting all time lows, now is the best time to invest. To minimise the risk and stress of the constant change, investors can opt for a 'fixed' rate loan rather than a variable. See the Pro's and Con's here