If you’ve been considering investing in a property to help achieve your future financial goals, you’re on the right track. Investing in the property market can be an excellent way to generate wealth and secure your financial future. However, we know property investment can feel like an unachievable goal if you don’t have the right resources and knowledge to get started.

That’s why we have put together 10 steps to simplify property investing and take you closer to owning your first investment property.

Please note, this blog post will give you general advice on property investment. For personal advice please book a 30 min call with our head Mortgage Broker Edwena.

Step 1. Increase Your Savings To Get Your Investment Property Sooner

The more savings you have, the easier it is to get started with an investment property. Setting goals and creating a budget are great ways to help you save up enough money for a deposit, settlement costs and any potential maintenance costs that may arise. Depending on your lender and individual circumstances, you may be eligible for lenders’ mortgage insurance (LMI) as an alternative way of financing your deposit for your investment property or for other costs associated with property investment. What is LMI? LMI are borrowed funds from the lender that are used to supplement your own savings so that you can invest in a property sooner rather than later. It’s a great option that helps property investors get into the property market faster than if you had to wait until you had saved up the full amount for an investment property by yourself.

Step 2. Choose Your Location Carefully For Maximum Capital Growth

When it comes to investing in rental property, all property investors know location is key. It’s important to invest in an area that meets your rental income and capital growth goals, along with your budget, to ensure the investment property you choose is likely to appreciate over time. Researching the area, including local property prices and rental yield, neighbouring property values and local demographics, can help you determine if the location offers capital growth opportunities. It is also worth noting how close a potential investment property is to necessary amenities such as shops, public transportation and schools. All of these factors can strongly influence potential returns on investment, along with rental income and should not be overlooked when making a decision on where to purchase an investment property.

Future investment property?

Step 3. Consider Ongoing Costs Such as Property Management Fees and Maintenance Costs

When selecting an investment property, it is imperative to consider the ongoing costs involved with the real estate investment. These costs include rates, building insurance, repair and maintenance costs, body corporate fees and sinking funds (if applicable) and (if you intend to rent it out) possible agency and property management fees alongside mortgage payments. It is important to budget for these items for your investment properties as they can add up quickly over time.

One of the best ways to protect your property investment is to invest in preventative maintenance. Replacing taps and other fixtures that are dated or worn down in your investment property can help you avoid facing higher maintenance costs for emergency repairs down the line that could significantly impact your bottom line. Additionally, by performing regular maintenance on a property, such as landscaping, cleaning gutters and windows, painting walls, etc., you will be able to keep your investment property looking attractive to assist property managers in attracting potential tenants, protecting your rental income.

Another way to add value and, therefore, further invest in your investment property is to consider putting money into renovations to help increase property values and/or increase your rental income and help make your investment properties more appealing to potential renters or buyers. Projects such as upgrades to kitchen appliances, bathroom fixtures and tiles, flooring updates, and adding energy-efficient features (such as solar panels) can all help improve an investment property’s overall appeal while also increasing its capital growth.

Lastly, when investing in property and investigating the property market, it is important to take into account any current zoning laws or regulations that may impact the property investment and how the investment should be managed going forward. Knowing the local laws will ensure that you are able to adhere to them when managing your investment property in order to avoid any potential penalties or legal headaches down the road.

Step 4. Research the Property Market

Before investing in property, it is important to do your research into the local property market. You should look into existing and upcoming prices, rental yields, and the current market conditions of the area you are considering investing in. Property investors do this to make an informed decision and be aware of any risks associated with their investment.

It is also advisable to speak to local estate agents who can provide valuable insight into the market trends in the area, along with potential rental income and enable you to compile a list of property managers in the area. Additionally, speaking to real estate agents and other professionals who are knowledgeable about the property market and can help you get an idea of current market prices, the potential for capital growth, as well as off the book deals that may be available.

Furthermore, doing a cost-benefit analysis before investing can help you decide if the investment is worth making or not. Evaluating factors such as up-front costs, including legal fees, time frames for returns on investments, ongoing costs such as property management fees and maintenance costs, along with potential rental income and future returns on your investment property, can help you make an informed decision. It is also beneficial to put your money into an investment property that has good resale value so that there is capital growth potential over time. Taking the time to learn about the zoning of the property you are considering and the potential to subdivide in future is an excellent tactic to future-proof your investment and ensure your property investment has capital growth potential now and in the future.

Learning about investment property

Step 5. Obtain An Experienced Conveyancer/Solicitor to help on your property investment journey

When it comes to investing in property, hiring a conveyancer or solicitor is a key step, as they are knowledgeable about protecting your rights and informing you of your responsibilities. A conveyancer or solicitor is a legal expert versed in the laws and regulations surrounding property transactions and transfers of ownership. They can provide invaluable advice on how best to protect yourself from any potential risks that may arise during the process, whether you are buying or selling an investment property. The cost of legal fees is money well spent when investing in property.

A conveyancer or solicitor will thoroughly check the contract for any clauses that may not be in your best interests, as well as making sure all necessary documents and forms for your investment property are completed accurately. They also understand complex terminology used in contracts and will be able to explain it to you so you have a full understanding of what is involved before signing the contract.

Furthermore, they can help negotiate better terms on your behalf if there are certain items you would like included in the contract that may otherwise not have been included. This could include requesting additional time for settlement or even a lower purchase price to maximise capital growth.

A conveyancer or solicitor can save you time and money but also protect you and help you avoid any potential risks along the way.

Step 6. Secure Financing 

Securing the proper financing for property investment is one of the first and most important steps for any property investor. Before you investing in property, it’s essential to understand your financial situation and the costs associated with purchasing a property. This can include bank loans, mortgages, loan-to-value ratios and so forth.

Consulting with a mortgage broker and obtaining quality property investment advice is highly recommended to help you determine which financing option best meets your needs based upon your current financial situation. A mortgage broker has access to dozens of potential lenders and can shop around for the best rates and terms available in order to get you the best deal possible for your purchase. Be sure to compare all options before making any decisions to ensure that you invest wisely and make an informed decision when selecting the right financing option for you.

Pinpoint Finance are a boutique mortgage brokerage helping Australians to find the right strategic finance solution to buy their next home, refinance or invest. To learn more about our services, property investment advice and whether or not this advice will suit your needs, click here, or if you are ready to dive right in, you can  Book a call with us, and we can help you get started on the path to reaching your property investment goals.

Step 7. Complete Necessary Inspections

Before committing to an investment property purchase, it is absolutely essential to arrange a building and pest inspection by a qualified professional. This detailed assessment of the property will help identify any existing or potential issues, allowing you to make an informed decision and, ultimately, protect your investment property over time. The process typically includes a visual inspection of all areas of the house and its surroundings, including the roof, walls, windows, doors, plumbing and electrical features.

Additionally, a pest inspection can detect any evidence of termites or other pests that could cause damage to your potential rental property. With these inspections completed, you will be able to purchase an investment property with the peace of mind of knowing that you are making a fully informed decision and having an idea of any costs that may be immediate or present ongoing maintenance costs in the near future, letting you plan ahead and budget for calls that may come from your property managers requesting repairs.

Step 8. Get Insurance For Your Investment Property

Investing in property can be an effective way to invest your money and build wealth over time, however, to help better protect your property investment, taking out an adequate building and contents cover is essential. Doing this can help give you peace of mind knowing that you, as the owner, are covered in case of any unfortunate events, such as a natural disaster or theft.

Depending on where you invest in the Australian property market, there may be different types of coverage available, so it’s important to research the different options for your property investments prior to purchase to ensure you have the appropriate level of coverage for your specific situation and location.

Here are some factors to consider:

  • The age of the property;
  • The condition of the property;
  • Zoning laws;
  • Crime rates;
  • Flood Zones (where there is flooding potential)

This is just the tip of the iceberg. Not all properties are created equal and there is so much more to consider with regard to investment property insurance. In order to obtain an adequate idea of what will be covered and the cost, you should get in touch with a trusted insurance agent to make sure all aspects are covered properly.

Create an investment property strategy

Step 9. Consider Tax Implications & Negative Gearing

When it comes to investing in property, there are a range of considerations to factor in, especially when it comes to tax implications. Factors such as capital gains tax, opportunities for tax deductions and negative gearing can all be applicable. Negative gearing is one such consideration that can play a role in your investment decision-making. This occurs when the rental income your property generates doesn’t cover the full cost of the loan repayments associated with the investment.

While this can provide potential tax benefits, it also carries some risks, as you might not have enough cash flow to pay for any ongoing costs associated with owning and running a property, such as rates, property management fees and body corporate fees. It’s important to speak with an accountant about these potential tax implications prior to investing in property so that you can make an informed decision about whether or not negative gearing is worth considering from a financial perspective.

Step 10. Think With Your Head, Not with your Heart When it Comes to property investment

We just want to reiterate how important it is to take a step back and think with your head rather than your heart when looking for an investment property. Even if a particular home catches your eye, has an impressive design and is exactly what you’re looking for; it might not end up being the best investment property for your financial situation or lead to the greatest capital growth.

So, when looking at potential investment properties, make sure to evaluate the pros and cons before purchasing. For example, investing in property on an incline may provide gorgeous views but could be more costly should you wish to renovate or improve the property, with costs involved such as excavation or retaining walls eating into the renovation budget. So, it is always worth careful consideration of the pros and cons of any investment property.

Other key considerations when investing in property include understanding local laws and zoning regulations which can impact whether or not certain types of development activity are permitted on the lot. Additionally, understanding the current real estate market trends, such as those related to rental demand, rental income and property prices, can help inform decisions about what kinds of investments may yield the highest capital growth returns over time.

It is also important to factor in long-term costs associated with being a landlord, including maintenance and repair expenses; property management costs; building insurance policies; legal fees or taxes; and vacancy rates. Finally, don’t forget about how much money you plan to invest upfront—you want your finances to be able to support whatever investment you choose!

Pinpoint Finance’s Guide to Investing is a great free tool that may assist in your property investment decision-making process.

By keeping all these considerations in mind when looking for an investment property, you can ensure you find an investment property that adheres to your needs both financially and legally whilst still having great long-term prospects for property investment success.