Buying a home is a long process that teaches you the tricks of dealing with banks, mortgage brokers and real estate agents. But investing in property can be a whole different journey through the market.
Buying property is one of life’s greatest achievements and a rite of passage for many Australians. The first purchase is generally a buyer’s first home. After years of renting or living with parents people decide they want the ownership and independence that comes with owning their own place. The process of purchasing a home is a huge commitment and learning curve as you’re thrust into negotiating with banks, mortgage brokers and real estate agents. So it would be fair to assume that once you have successfully purchased your first home you are equipped with the know-how to buy an investment property.
However, buying an investment property is a remarkably different process to buying a home.
The major differences
When you’re looking to buy a home, you’re looking at a host of factors that are relevant and specific to your own needs. You’re looking for the home with the right style, in the right neighbourhood, within the right budget. Your opinion is the only one you need to satisfy.
When buying an investment property, the situation can be the exact opposite. Investing in property is about growing a property portfolio and making a financial gain. The opinion that matters becomes that of the current and potential market place. A property that will be in high demand with the potential to appreciate substantially over time is the goal. An investor shouldn’t allow their personal preferences to cloud their logical judgement. Rather than an emotional purchase, an investment property is a rational one.
It’s important to ask yourself why you are looking to invest in property. Seeking advice from a settlement agent or financial planner can help you outline your goals and objectives for investing, with consideration to how the purchase will affect your financial situation now and in the future. Buy a property with the potential to meet your investment objectives.
Different suburbs have their growth spurts and price spikes, but for investment purposes, logical purchases are those in the more populated suburbs, with close proximity to the facilities most important to the majority of potential tenants, these are; schools, parks, public transport, retailers, and entertainment. Victorian and Federation homes are some other properties that yield a great return on investment because they are rare and are no longer being built.
Once the investment has been made, you need to be patient and willing to wait and see the financial growth of your investment. Eliminating emotions from the purchasing process is a difficult task, especially when there’s so much money at stake. You just have to keep in mind that the purpose of your investment property is not for your living. It is to make your money work just as hard as you to grow your capital.