5 questions to ask as first-time property investors

Written by Hamish Ferguson

August 16, 2022

property investor

 

Have you always wanted to invest in real estate?   

You may have been following the local real estate market for some time and are developing a sound understanding of what is needed to succeed with property in your area. Or you have been looking interstate and keeping an eye on an area that you see has the most potential for you, wherever that happens to be in Australia.  

New investors are looking to either increase their cash flow now (and maybe use that extra cash flow to pay down their loans) or build future wealth through equity growth. Of course, if possible, you are hoping to do BOTH.  

Whatever your motivation for pursuing your property investing dreams, there are five key questions you should get answers to before entering the property market.  

#1 – Who can be a Real-Estate investor? 

There is an appeal created for property investing after hearing success stories on social media or from friends and family. We all hear the good stories about how properties have appreciated in value rapidly in only a few short years, leading to significant equity growth and massive rental returns, or the brilliant tenants that look after the home like their own and never want to leave. 

“They” may all be quick to share the good stories while overlooking the parts of being a property investor that is a little harder to deal with, like obstacles. Obstacles may arise, including blocked drains, unscheduled yet necessary repairs to bulky items like dishwashers or hot water systems, tenants who may need a little more management than we would like, or the leasing agent has not ensured the rent was paid on time.  

The good and bad stories are all part of the real estate investment journey.   

It is common to have significant concerns as an investor, especially if you do not have good advice from experienced professionals before starting your investment journey and working with them to get the best results possible.   

However, if you seek advice from experienced professionals, you will know what you are getting into you at the start; you can prepare in every way for the adventure that awaits you.  

#2 – How to prepare yourself sufficiently before the investment? 

Preparation is said to be the breakfast of champions. So 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 an effective way to start; however, you can save time by finding an experienced property investment advisor. An experienced advisor is committed to following all the trends and staying up to date with real estate investment changes. In addition, they are looking at both local and properties in other states, wanting you to get the most out of your investment both now in terms of cash flow and in the future in terms of equity growth.  

Good preparation also involves examining your household budget and making changes to prepare for property investing. Of course, paying down debt and creating some room in your finances for investing makes sense too. A good advisor can give you the right advice or point you in the right direction for valuable resources. 

#3 – What is an estimated Deposit needed for the investment? 

As a first-time investor, you may need a cash deposit for your first real estate purchase. However, suppose you have a family home already. In that case, some investors find they can use the equity growth in their house to fund the investment deposit (and so not have to use their cash reserves).   

property investing

While a 20% deposit is the standard amount required, there are lower % options available. Sometimes, when the funds are available, you may choose to go higher than 20% (and lower

your ongoing repayments). Other essential loaning factors to be aware of when considering what % deposit you will use (such as mortgage insurance) and loan products (such as an “offset account”) .

Therefore, it is essential to seek the advice of an experienced mortgage broker when it comes to questions about arranging a deposit. Their advice may prove invaluable when it comes to this aspect of investing, as they can suggest the right path of loan products and services that will suit your needs. Not all investors’ situations are identical, and competent professional advice may mean you do not need to reach as far into your pocket as you think.  

#4 – How to Find the Right Property Investment Loan for Your Circumstances? 

loan

Following your queries about how much you need as a deposit, an experienced mortgage broker can help you find the kind of loan that is right for you,

 considering your unique circumstances. Having an experienced professional Matching your property investment goals, financial circumstances,

 and 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 the same.  

#5 – Am I able to Build room in my Budget for Higher Interest Rates in the Future? 

An experienced mortgage broker will often recommend stress-testing your property investment loan to ensure there is room for potential future changes in interest rates. They will stress-test a client’s loan by factoring in an extra % rise and talk to you about those costs. Often a 2% interest rate hike is used to ensure they can comfortably handle rate rises. In some cases, they will factor in a 3% hypothetical interest rate increase to add an extra degree of certainty for clients. While we are now in a low-interest-rate environment, it is always a clever idea to prepare for the future.  

Property investing has been one of the most popular investment strategies for people from all levels of society. Yet, the entire process can seem daunting as you think about your first foray into property investing. However, after answering these five key questions, you will be better placed to plan your first real estate investment confidently.  

Help My Wealth’s community could help you take those steps.

Help My Wealth has found experienced Property Investment Advisors and Mortgage Brokers with many years of experience recommending the choices of investment properties and loan products available to them. They will travel with you along this journey as guides while you make your first investment decisions.  

Are you thinking about first-time property investing? Talk to one of Help My Wealth’s experienced professionals today and receive the best advice for launching your investment success.   

 Reach out to HMW now and start your journey.  

 

Want to know more about this topic or how to get started? Then contact us here

Phone

0240141949

Email

info@helpmywealth.com.au

Address

Suites 1 & 2 Lake Macquarie Fair, 46 Wilsons Rd, Mount Hutton NSW 2290, Australia

Related Articles

Savings in Australia: Everything You Need to Know

Savings in Australia: Everything You Need to Know

In our lifetime, there are so many things that we need to spend on. The list seems never-ending from our daily needs, vacations, weddings, and brand-new cars, to saving for the deposit for our dream house. But while we go through our list and spend our hard-earned...

Complete Guide to Creating a Personal Budget 

Complete Guide to Creating a Personal Budget 

Ever find yourself wondering where all your money went at the end of the month? You're not alone. Life can be a whirlwind of expenses, from bills and groceries to that irresistible coffee shop latte. Without a personal budget, it's easy to get side-tracked. In this...

Are Australian Future Home Buyers at Risk?

Are Australian Future Home Buyers at Risk?

Financial  Stress  Continues RisingCould financial problems be putting future home buyers at risk? Financial problems and stress amongst Australians continue to rise alongside housing and petrol prices. The New Year, 2022 started on a negative note for households, as...

Contact

Phone

0240141949

Email

info@helpmywealth.com.au

Address

Suites 1 & 2 Lake Macquarie Fair, 46 Wilsons Rd, Mount Hutton NSW 2290, Australia

Share This