Buying an investment property is along the same level as choosing your career, deciding what university you want to go to, or even what pet you should consider – It’s all relative to your needs, aspirations and well, finances.
This is a very real, very abrupt and almost a “don’t do it” view/focus on investing in property. But just stick with me, read through to the end – it’s a reality hit yes, but after many, many conversations with current clients, new clients, friends, their friends and networking circles, I have found the questions asked about investing in property are not necessarily the wrong questions, but they are questions being asked too early.
It is not about, what, where or when first, the questions that should be considered before the Why, Where and When is:
WHY do I want to invest in property?
SHOULD I/we invest in property?
HOW you go about your journey of investing in property?
Don’t get me wrong, if it’s for you, property investment can be rewarding. However, you first need to know why you even want to in the first place. The why will drive your plan… If your why is because
Jo Bloggs got a property – then maybe spend some more time here before you proceed…
Just like every goal setting plan, if it’s really not you or you really have no “why”, it’s not going to turn out Rosie.
If you understand your “Why” you want to have and investment property, you need to then consider if you “Should” – Should you? Is it really what you want to do right now? Are you ready for this commitment? Wait – Commitment? Yep – The “How” is going to outline how commitment is worth it – but it’s the commitment that makes everything come together.
Honestly, I am not here to tell not to buy property or to go buy the smallest, worst conditioned property in what has been “dubbed” as the worst, no go suburb. I am wanting to outline to you, that your investment property will perform just as well or as bad as the next, NOT based on location. (that’s the last 20% factor that is related to capital growth that is more in line with your exit plan), but instead based around your pre purchase set up and your plan/strategy for the lifetime of the investment.
How you spend your money and set up the mortgage, along with the assistance of the financial planner, will affect how your investment will perform in years to come.
How you spend your money within the investment property mortgage/lending is more important than the suburb – A good performing investment property is a good performing investment property. Period.
If you are reaping the rewards, the numbers are adding up and you are now onto your second/third or fourth purchase, does it matter if your property may NOT be in the top 5 suburb list of the year?
Property trends, like fashion trends, come and go. Investment Properties are not a quick and easy money maker and those that are not in it for the long committed game should look for other options to consider for the quick buck (Which, from many authors suggestions, that are successful in their rights (eg Warren Buffet) advise that there is no such unicorn just fyi).
In a nutshell – It’s just like owning a car.
The property will need to be looked after (Property Management – also a determiner of property performance – this is another discussion/blog).
You will need to review maintenance / services (General and major maintenance like hot water systems, painting, general appliance maintenance).
Consideration of how long you will actually want to/need to hold it before selling it for it to be worth your time IE Exit Strategy - (that’s where the locations then start to come into it with capital growth – but that’s also another whole discussion in itself)
As you can tell by now, there is a largely misconstrued focus on buying in the RIGHT Suburb, the TOP suburb or even, the suburb that is currently showing great results.
When in reality, who can say that this is actual information that is factual, non public, generalised information that is relevant to you and your wants/ needs/goals/financial requirements?
That would be your team.
The team of professionals/industry experts that you seek for their advice based on your needs/wants/goals/financial situation. If you are going this journey on your own based on research alone via the internet and not seeking actual accountant, financial planner or local area buyers agents’ services, you are making what is already a risk on the best of days, an even higher risk. Is it really worth the real, long term monetary risk when you have such resources of experts available at a touch of a button or a phone call? No. It just simply is not.
Property should not be treated as a retail or fashion trend. Just because your Sister / Brother / Cousin / Friend / That girl from school have investment properties does not mean you need one or should have one, let alone go it alone. Investing money in professional advise can and will save you thousands, sometimes tens of thousands (oh, and some heartache/ego bruising).
SO, if you are still with me and still considering an investment property or even have decided that it is something you want to pursue, I am all for you smashing your goals and achieving those milestones!
Before you go get your heart set on a house/unit/development and commit to a property that SEEMS like it will perform as required / as you need – lets go through the motions of the above considerations before you even think about stepping foot in a property or even start selecting a suburb.
A quick guide about the before buying can be downloaded here to start you on your way to setting yourself up for success – DOWNLOAD HERE
If checklists aren’t your thing (yet, because they will be by the time you purchase the property) you can contact us directly for a complimentary and confidential chat about where you are at and where your next steps should be taking you to make sure you are on the right path.
Schedule a Strategy Call with Amanda Turner – Principal Director of OPQ - HERE
Have questions about our Buyers Agent service? - Contact us - HERE
Need a few queries answered about Property Management services? Contact us - HERE