A beginner’s guide to investing

x_157_81509_0_14100303_300You’re financially secure and you’re ready to start investing in the property market. Before you go any further, however, have a read of some of the basic questions people have about property investment so you can be sure you’re ready.

Why should I invest in property?

There are a number of reasons why people look to the property market to invest their money:

  • property is a physical, tangible asset
  • the real estate market is less volatile than shares
  • you have agency in growing the value of the investment
  • properties tend to appreciate with value over time

What can I use my investment for?

You can put your property investment towards a number of different purposes. In the short term, some do it to fund further investment in properties. Others will incorporate it into their retirement strategy, using their portfolio of properties to create a substantial nest-egg for when they’re done working.

Isn’t buying a new property expensive, though?

Buying a new property for investment purposes isn’t cheap, but if you rent your property out to tenants, you can help pay off your mortgage using the rent you collect on a weekly basis. Don’t forget there are also tax advantages if you decide to rent it out.

This is also why, if you’re concerned about finances, it’s important to choose the right time to invest, namely when you’ve already paid off a good chunk of your existing mortgage. That way, you can leverage your equity toward buying a new property.

I’m sold. What should I look for when buying an investment property?

When you buy an investment property, you want a home that will grow in value over time. The signs might not always be obvious. You’ll want to look at the current real estate market in your state and, if possible, your particular area. Organisations like RP Data and Realestate.com.au do regular market updates and offer suburb profiles.

You’ll also want to make sure you can make renovations and additions to increase a rental property’s value, and see if the neighbourhood is one on the rise.

But how can I tell if a neighbourhood is on the up-and-up?

Are there infrastructure developments on the horizon? Or are industries and businesses moving in, guaranteeing employment in the future? Have a look at the main shopping centres, too, and see if they’re buzzing.

If an area is surrounded by other thriving, growing suburbs, then that’s also probably a good indication that it’s on its way up.

How can a real estate agent help me to invest?

A real estate agent can match you with a property, as well as use her or his local knowledge to let you know if the area you’re thinking about is a good prospect for investment.

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