Considering your first purchase? Congratulations: now it’s time to develop a sound financial strategy. All great investment success stories start with a solid plan – after all, how will you set investment goals, formulate a strategy to achieve them and measure your progress without one? Get in the fast lane of successful property investment by following these three simple rules first.
1. Crunch the Numbers
Real estate investment is like running a company; you need to manage your cash flow, forensically examine your financial position and focus on long-term profitability. The ultimate question is, can you afford it? To answer this, work out the real cost of your purchase, including stamp duty, legal fees, body corporate costs, insurances, leasing fees and other maintenance expenses. Estimate your rental revenue
, but be conservative and give yourself a buffer, factoring in interest rate hikes, lapses in tenancy and other variables.
2. Get Professional Advice
Unless you’re a CFO, getting a handle on your finances and the tax complexities of an investment portfolio can be tough. Don’t go it alone – seek the services of a team of professional mortgage brokers, financial planners, accountants, conveyancers and/or solicitors and heed their advice. They’ll be able to help you determine what you can afford, assess risk and assist you making smart investment decisions that also take advantage of tax concessions.
3. Do Your Research
Before you even start the property hunt, do your homework. Research the market, understand real estate price cycles, areas of high demand
and know your price point. Leverage the advice of your finance team, get pre-approval, know your limits and be ready to hit the ground running when a property presents. “It’s really about doing the research upfront and making sure you’re armed with all the information,” says Mirvac national sales director Kathy Arici. “Get everything set up first and then go looking.”