How do you know if you’re ready to buy an investment property? A quick hint: you’re here, reading this right now. That means you’re thinking about it, at least.
0. You’ve been thinking about it.
Perhaps you’ve been thinking “Maybe I should get an investment property?” or seen your friends and family buy their first properties – or perhaps they have multiple properties! Maybe you don’t quite understand how it works yet, or you’ve been putting it off because it sounds “too hard”. However, as long as you’re thinking about it, you’re on the way to being ready – and it’s not as hard as you might think.
Below are the 5 ways to know if you’re ready to buy an investment property – keep a tally of how many you can say “YES” to and check your score at the end – don’t forget to count question 0!
5 Ways to Know if You’re Ready to Buy An Investment Property
1. You have a goal in mind.
You have an idea of what you want to achieve from investing – even if this is quite generalised at this point. Your goal could be to retire early, set up the future for your children, or even simply to work less.
When you begin the process, a property investment advisor can help you refine your goals and create a personalised property investment plan that will enable you to reach them.
Richard Crabb, Managing Director of the Aspire Advisor Network put it best, saying:
“In my experience, there’s no substitute for knowing where you want to be before you take the first step. It allows you to adequately prepare and venture forth fearlessly.
It’s often the crucial difference between building a rolled-gold investment portfolio or being stuck with an unsaleable lemon when it comes time to exit.”
2. You’ve considered your personal life.
You know that while property is a long-term investment, it’s still important to consider if there’s anything coming up that may take priority in the short term – if you’re about to, for example, have a new-born child, a wedding, or a job change, it might be worth allowing yourself just enough time to step into that new responsibility.
Perhaps these changes are a few years off for you, and you’re simply looking to set yourself up financially to feel more secure regarding your family and/or career. Buying an investment property could be the push that you need to finally start budgeting effectively or really thinking about the future. Plus, property provides a high level of financial stability that is difficult to replicate with other sources of income – which is great for when those big life events do roll around!
3. You’re earning enough money to buy one and have some savings or equity.
You’ve answered the seemingly obvious, but extremely important, question of whether or not you can afford an investment property, and how it will affect your day-to-day finances. Everyone’s circumstances are different, so if you’re not sure, you’ll need to discuss with a professional what you’re able to sustain in regard to mortgage payments.
You’ll also need to have savings for the deposit, though if you have a mortgage already for the family home, you are likely to be able to use equity to assist with the up-front costs of a second (or third) property. Check with your broker to discuss what options you have.
4. Your finances and finance team are in order.
You have, or are in the process of building, a strong team of financing experts to surround you. These people will be the backbone of your decision and help you make the most of your finances.
- A mortgage broker who specialises in investment lending will find you the best property investment loan – and the cheapest rate is not the only consideration here. It is quite often the features of loan, such as offset accounts and repayment structures that will help you into home ownership sooner.
- An accountant who specialises in property investment will be your biggest asset in ensuring you have all the right legal & financial structures in place and get every tax benefit available. Investment properties can be a goldmine for tax claims and the right accountant will help you dig up every last one, putting money back into your pocket – and with the right property, this can equate to thousands of dollars each year.
5. You’ve got professional advice.
You understand that buying an investment property involves planning, research and industry knowledge, so you’ve found a property investment advisor who has put in the time and effort to learn the ropes and will help you find the property that suits your situation and goals.
It’s important to ensure this person is properly qualified, so look for the QPIA (Qualified Property Investment Advisor) logo. A QPIA is someone who has completed an extensive training course through PIPA (Property Investment Professionals Australia) and has committed to following a strict set of guidelines to ensure their service is client-centric. If you’re still not sure what it means to be a QPIA, check out this article.
Property Investment Scoreboard
Time to tally the scores! If you answered yes to:
0 – Congratulations on finding this article! Since you made it this far, maybe it’s worth another read to retally your score – there’s a little investor in everyone.
1-2 – You’re still in the researching phase and aren’t 100% sure yet. It might help to understand WHY you’re investing – this article might help pinpoint your goals.
3-4 – You’re getting serious, but just have a few things still to tee up. Call us on 1300660335 or email hello@prospaproperty.com.au and we can talk you through the process or put you in touch with the people you need!
5-6 – You are READY! What are you waiting for? Ring Prospa Property Advisory on 1300 660 335 or email hello@prospaproperty.com.au to make your investment property dream a reality, today!
