Property investment can be daunting to some who are a little less experienced but done properly, can be a very rewarding venture. This article provides a very basic real estate investment checklist that you can follow to help ensure you are on the way to success. Of course we recommend using our services for your investments which will ensure you get expert help, the checklist is still handy for your own benefit.
Real Estate Investment Checklist Item 1: Are you in a good financial position to invest in real estate?
Equity or cash, combined with income is normally enough to get started in property investment. However, at times it is possible that loan repayments may need to be topped up from your own pocket. Also you should ensure that you can cover any periods where the property maybe vacant and no rental income is received.
In addition be prepared for a rise in interest rates which may leave you out of pocket if the loan repayments increase significantly.
We strongly advise you discuss your plans with your accountant. Property investment will significantly change your tax position and you want to make sure that your accountant is onboard with your plans.
Real Estate Investment Checklist Item 2: Are you mentally ready to invest in real estate?
Sometimes property investment can be quite stressful, especially when you have some unruly tenants or worse, no tenants. Other cases that can add to stress include dealing with builders and associated tradies. Be ready to take on some tackles head on but also keep in mind that it will be worth it in the long run.
Our services include managing builders and tradies through to connecting you with appropriate people to manage occupancy and tenants, mortgages & financial planning, accountants, etc.
Real Estate Investment Checklist Item 3: Have you been approved for finance and do you know how much you can borrow?
It goes without saying that you need to have an idea of how much you want to invest into a property so make sure you have an investment loan pre-approved for that amount. The major of benefit of doing so is that knowing you have the finance, you will be able to move quickly once your desired property has been found. It will also allow you to negotiate strongly for a quick sale.
Real Estate Investment Checklist Item 4: How are your negotiating skills?
Negotiating a beneficial deal/price is a great advantage. If your negotiating skills are not so strong, line up someone to do the negotiating on your behalf. A strong negotiator could potentially save you thousands.
Real Estate Investment Checklist item 5: Have you decided if you want to buy new and build or purchase an established property?
Carefully do your planning here. It’s worth discussing this with your accountant as there are quite considerable tax benefits that can be gained through buying land and building. This can have a real impact on the return on investment. The disadvantage of building is that you’ll need to wait for the building to be completed and tenanted before seeing any rental income return which would likely be 3 months or more. However capital growth achieved by building will see you have equity in your new investment property as soon as the building is completed.
Real Estate Investment Checklist Item 6: Have you done your research and found an area to target?
Now we’re getting down to it. To discuss this topic at length it would be better suited in a white paper. If you’re looking to buy land and build, you want to find land in an area where the blocks are selling fast and are in demand. You’ll also want to research occupancy rates and the average rental yields. And of course, you’ll want to research average house prices. High occupancy rates and high rental yields indicate a more profitable investment.
Other factors in determining an area to invest in include; public transport, public facilities such as schools and sporting facilities, medical and hospital, shops and other community services.
Also research the history of the area with a focus on property prices. You’ll want to avoid any areas that have had a bit of a roller coaster ride over the last 10 years.
It can’t be emphasised enough how important it is to do your homework at this point. To capitalise on a growth area that is in demand can result in a very successful investment. Get it arse about and well, you get the picture.
Real Estate Investment Checklist Item 7: Have you got a solicitor and/or conveyancer?
To proceed with your purchase, you’ll need a solicitor and a conveyancer however most of the time the solicitor will organise the conveyancing to be done on your behalf unless you have other preferences. If you already have a solicitor then that’s great, it might be worth advising them of your intentions.
If you don’t have a solicitor, we recommend finding one before beginning the process to ensure there are no delays once you have found the perfect investment property.
This is a simplistic overview of the kind of things you should check and have in place before embarking on your new venture. If it seems a lot to worry about and if you are uncomfortable managing it all then our services will enable you to rest easy as we can manage the entire process for you and on your behalf.
It’s worth noting that when it comes to choosing an area to invest in, often experience is the key to selecting a successful area. We have found successful opportunities and areas for many people and our experience has taught us what to look for.
Feel free to give us a call for chat if you would like to know more about our services.
Disclaimer: This is general information only and is intended to give you things to think about. We recommend you seek professional advice (us) in relation to your own circumstances.