Strong returns on investment, value growth over time, and a flexible purchase that can improve your cash flow in the long term — these are just a few advantages of buying an investment property. But before you get started, you need to make sure that your strategy is good. Check out these investment property purchasing tips to get more from your purchase.

Define your objectives clearly

Before you purchase an investment property, you need to be clear on precisely what you want to achieve. Of course, the obvious answer is that you want to earn money from the investment, but there is more to it than this.

How much profit do you expect to receive from your investment? Do you want to receive short-term gains or enjoy long-term resell value? Are you looking for slow investment growth over time, or something that will appreciate more quickly? Do you expect to spend a lot of time working on the project, or are you looking for more passive income? Answering these questions will help you understand the best direction for your investment.

Decide on your strategy

This is another important part of the planning and preparation process. An investment property can be a great way to grow your income, particularly in the buoyant Australian market, but there are many ways to go about this. Refer to your investment objectives to help you decide on the right course of action.

You may decide to opt for:

  • A renovation property that you will work on to increase its value
  • A buy-and-hold property that will appreciate in value over time
  • A positive cash flow property that will provide you with a rental or commercial income over time
  • A negatively geared property that provides tax deductions
  • Another form of investment income growth

Tips For Buying An Investment Property | Sydney Brokers Blog

Understand the ongoing costs

There will be ongoing costs associated with your investment property. Some of these costs will continue after you have paid off the mortgage, so it’s important to be aware of these as you seek the best possible return on your investment.

Consider:

  • The mortgage interest rate
  • The monthly mortgage premiums
  • The lenders mortgage insurance (LMI)
  • The cost to renovate the property
  • The cost to provide energy, heating and air conditioning to the property
  • Any taxes that may be applied to your property
  • Any other costs that may be incurred after you have purchased the property

Get to know the area and the market

While property investment tends to be a lucrative option for most Australians, it still pays to do a bit of research. Firstly, you need to know about property prices and trends in your area. Is this a fast-growing area in terms of property prices? Are there any planned infrastructure projects in the area that might influence property prices in the future?

If you are purchasing a commercial property for investment, you need to be even more diligent with your research. You will need to consider the specific needs of the area’s population, as well as the kind of business that would perform best in this location.

Know the property market | Sydney Brokers Blog

Seek a property at a competitive price

You may think that purchasing a property at a good price is an obvious tip, but it’s still important to consider this. Purchasing an investment property provides tax deductions — such as the cost of borrowing and the cost of maintenance — and this can sometimes cloud the judgement of buyers.

Yes, these tax deductions can be valuable when you purchase your property. However, this should not be your main motivation. Even with the deductions, paying too much for a property can leave you out of pocket in the long term. Take time to shop around in the market and find a property at the best possible price.

Consider your mortgage options

When buying an investment property, you have some flexibility when it comes to your mortgage. You may decide to opt for a fixed-rate mortgage, locking in your interest rate over the full term, or you may prefer a flexible mortgage rate that changes over time.

Pre-approval is also an option. This will lock in a specific mortgage rate in the short term, protecting you from any price increases that may occur while you prepare for the purchase.

Leverage expert assistance

It certainly pays to draw upon expert advice and guidance when buying an investment property. You’ll also need mortgage brokerage services that can help you find the very best deal on your investment property loan. Reach out to the team at Sydney Brokers and discover more about how we can help you find the loan you need.