Buying Property Tips

Creating wealth through property investment is a well-established practice in Australia, with many property owners having reaped positive capital gains (profit) in the last property boom. However, buying an investment property can be quite different from buying an owner-occupied home.

There are a few key factors to consider:

  • Suburb location?
  • Is it close to transport?
  • Is it close to shops, cafes, etc?
  • Is it close to schools or other educational institutions?
  • Is it functional?
  • Does it need any repairs or renovation?

When purchasing an investment property, also consider aspects such as:

  • Does the area have good capital growth potential?
  • Is the demand for rental properties strong in the area?
  • Will the property need a lot of maintenance?

Seek Professional legal and financial advice

There are a number of tax and legal ramifications with property investment. It is vitally important you seek professional advice from a financial planner and a solicitor on the most appropriate strategy.

Use the equity in your existing property to purchase

Many property owners have a significant amount of equity in the homes or other properties owned that they can tap into to purchase an investment property.

Consider borrowing the purchase price and costs

If you have enough equity in an existing property you may want to consider borrowing the full purchase price of the property and associated costs - you won't have to save for a deposit and you may be able to claim any rental short-fall on a negative gearing basis. You should seek advice on this.

Positive vs Negative gearing

Consult with your financial advisor before purchasing an investment property on whether positively or negatively gearing the property is of greater benefit to your financial needs.

Select the right loan

There are many loan products available to residential property investors and the right loan will depend on your investment strategy.

Interest Only vs Principal & Interest

Although interest only loans will not reduce the loan amount, they will result in lower monthly repayments and allow you to make greater contributions to your principal place of residence.

Think long term with investment properties

As with all investment strategies, a long-term approach should be taken when purchasing an investment property. If you choose carefully you could expect good returns per year and depending on market condition and personal circumstances you may look at keeping the property for a minimum of 7-10 years.

If you are looking to invest in property we can put you in touch with one of our recommended Professional Buyers Agents to assist you with this process.