How to invest in property
Where to start, how to find a property, and the steps to get finance.
Whether you are looking to buy your first investment property, or have quite a few investment properties already and are looking to expand your portfolio, it’s always a good idea to do your homework before purchasing a new property.
The ultimate goal is to make sure that you are maximising returns, are making an investment that is within your comfort zone of risk, and that can be used as part of an overall long-term plan to secure multiple passive income streams.
Where to start
The first place to start when considering an investment property is deciding on the outcome you require. Planning your financial goals will help narrow down choices to those that perform in the way you need them to. Consider what kind of passive income you will need and work backwards from there.
Look for investment property types that will allow you to generate the highest returns without being high risk, and that has the capacity to generate equity as quickly as possible. Having this to use for subsequent purchases will be vital for acquiring additional properties without having to come up with large amounts of extra capital.
Many investors are starting to look to dual key homes (otherwise known as dual occupancy homes) as exceptionally viable investments due to the lower initial capital required, the higher rates of guaranteed rental income generated, and the lower regular outgoing expenses after purchase.
Find the right property
There are several important details that will need to be well researched before you even consider an investment property.
First and foremost will be the location. What is growth like in the area? Is there existing or projected infrastructure that would make this appealing for tenants. Is there a strong demand for rental properties in the area, and what kind of rental income can you expect to generate based on actual data from other similar properties in the area.
Secondly, you want to look for a great purchase price that comes with a long-term proven track record of quality control and positive reviews. To lower your risk look for fixed price turnkey (completely finished) house and land packages so that you aren’t left out of pocket or hit with extra costs after the build. Choose a house plan optimised for tenants, and look for a home with minimal ongoing maintenance costs. A lower price shouldn’t mean you end up paying more later.
Thirdly, look at the projected returns as well as the initial investment amount. Return on investment (ROI) or rental yield depends on annual expenses such as property management fees, losses for weeks when your home is not tenanted, repairs, maintenance, insurance, council rates and more.
It also depends on the purchase price plus extra fees such as stamp duty, legal costs, loan fees etc. Make sure that you look over all of these projections and that the advertised ROI matches up.
Make sure you are getting the best deal
So you think have found a great property, the rental yield is strong, and it looks to be a low-risk investment based on historical data and projections. Should you be signing on the dotted line? Absolutely not. Check out the competitors, and making sure that you are getting the very best deal, and not forking out thousands or tens of thousands of dollars more than you need to. Make sure that you are also getting the best ROI for the purchase price.
Choose the right finance
If you’ve decided that a dual occupancy home fits with your long-term investment strategy- saving $10,000 on stamp duty and only paying one set of council rates to generate two income streams is hard to look past – the next step in getting finance.
Before you head to the bank consider this. Not all banks will offer additional finance if they have already lent for one or more existing properties. You may also end up paying higher interest rates or having to put forward more substantial sums for a deposit.
It would be in your best interest to speak to a professional who can compare lenders and find the best option to suit your individual circumstances. After all, the more interest you pay, and the higher your initial outgoing costs, the lower your return on investment.
There are also financial planning products that you may be unaware of which allow you to pay off your properties sooner. The right broker will be able to examine your individual position and make recommendations that could fast track your investment growth.
Why Dual Key Homes Pty Ltd?
- Offering the best value for money properties in investment hotspots in South East Queensland
- Fixed price turnkey house and land packages
- Return on Investment projections based on guaranteed rental income amounts as per an independent third party
- Complimentary and obligation free consultation with our in-house finance broker to find the best lender for you
- Offering the Mortgage Down financial planning tool to help you pay off your property sooner and maximise tax deductions
- Fixed price conveyancing at $1060 through our affiliates
High quality homes with designs optimised for tenanted properties- Established track record of outstanding customer service