First Time Property Investing? 5 Questions You Need to Ask

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Have you always wanted to invest in real estate? Perhaps you have watched family and friends as they have successfully invested in real estate and you have been thinking about trying to repeat their successes for yourself. Or, maybe you have been following the local real estate market for some time and have a good idea of what is needed to succeed with property in your area. Whatever your motivation for pursuing your property investment dreams, there are five key questions you should get answers to before first time property investing.

#1 – Is Real Estate Investing Really for You?

When you get together with friends and family and you hear stories about their successes with property investing, the whole idea of becoming a real estate investor seems like a dream come true. You hear the good stories about how they’ve had brilliant tenants, or how they have witnessed their properties appreciate in value rapidly in only a few short years. Friends and family may be quick to share the good while over-looking the parts of being a property investor that are a little harder to deal with.

Blocked drains, unscheduled yet necessary repairs and tenants who may need a little more management, are all part of the real estate investment journey. It isn’t common to have major concerns as an investor, especially if you have good advice before starting your investment journey and work with property professionals along the way to get the best results. However, if you know what you are getting into you at the start, you can prepare in every way for the adventure that awaits you.

#2 – Are you Sufficiently Well-Prepared for First Time Property Investing

Preparation is said to be the breakfast of champions, and when you prepare well before embarking on your property investment journey, you are giving your chances of success a huge boost. Preparation begins with being well informed. Researching everything you can about real estate investing is a good way to start; however, you can save yourself a tonne of time by finding a good property investment advisor. A good advisor is committed to following all of the trends and staying up-to-date with all of the changes that have an impact on real estate investment.

Good preparation also involves examining your own household budget and making changes to prepare for property investing. Paying down debt and creating some room in your finances for investing makes sense too, and a good advisor may be able to give you advice or point you in the right direction for useful resources.

#3 – Do You Have a Deposit Ready?

As a first time investor you may need to have a cash deposit for your initial real estate purchase. It is always best to talk to a good property investment advisor or mortgage broker when it comes to questions about arranging a deposit. Their advice may prove invaluable when it comes to this aspect of investing. Not all investors’ situations are identical and good advice may mean you don’t need to reach quite as far into your pocket as you think.

#4 – Do You Have the Right Property Investment Loan for Your Circumstances?

Following your queries about how much you need as a deposit, a good mortgage broker or investment advisor can often help you identify what kind of loan is right for you, taking into consideration your unique real estate investor circumstances. Matching your property investment goals, your personal financial circumstances, and your future needs to a suitable loan product can make a significant difference. Every real estate investor is different and no two solutions for their needs will be exactly the same.

#5 – Have you Built Room in Your Budget for Higher Interest Rates in the Future?

Good mortgage broker advice often recommends stress-testing your property investment loan to make sure there is room for possible changes in interest rates. Vision Property & Finance’s Hamish Ferguson, a mortgage broker with almost two decades of experience advising property investors on their choice of loan products, says that stress-testing an investor’s loan is an essential part of giving good advice.

“We stress-test a client’s loan by factoring in an extra 2% in interest rate increases to make sure they can comfortably handle rate rises. In some cases, we will even factor-in a 3% hypothetical interest rate increase to add an extra degree of certainty for our clients. While we are now in a low-interest rate environment, it is always a good idea to be prepared for the future.”

Property investing has been one of the most popular investment strategies for people from all walks of life. Initially, as you think about your first foray into property investing, the whole process can seem daunting. After you have answers to these five key questions, however, you will be much better placed to confidently plan your first real estate investment.

Thinking about first time property investing? Talk to one of Vision’s experts today and receive the best advice for launching your investment success. Call us on 1800 004 663 or contact us.