Property investment is one way for savvy investors to get on the path to wealth-building and enjoying a passive income stream. Still, it’s a big commitment and you need to make sure you know what you’re getting into.
So how will you know if you’re ready to take the leap?
1. Your finances are in good shape – and you’ve crunched the numbers
This is possibly the most important thing to consider.
- Have you already paid off your mortgage?
- Do you have equity in your existing home you can use as a deposit on another property?
- Have you saved hard and now have a tidy lump sum you can use?
- Or perhaps you’ve come into some money, through an inheritance?
If you can honestly do a quick mental audit of your current financial situation and come away thinking, “I’m doing pretty well” – then that’s a great starting position.
2. You’re clear about your investment goals
You need to be very consistent around what in fact you are aiming for. What’s your strategy? Are you trying to ‘flip’ for profit, or are you thinking long term? These decisions will impact how much you borrow and what you eventually buy.
3. You’ve done your research
People who get caught out in the property investment game inevitably haven’t done their research properly. Emotion should never come into it; just because you like a particular property, or suburb, doesn’t make it a good investment. You really need to look at the growth potential, rental returns, overall demand and possible capital gains. What are the demographic trends? What’s the public transport and schooling situation like? Check whether there are any upcoming developments that will create a negative (or positive) impact. Do your due diligence, because extricating yourself from an undesirable property investment can prove both tricky and costly.
4. The realities of being a landlord aren’t lost on you
Being a landlord is a lot of responsibility. You’ll have to be prepared for extra hassle and expense as you navigate this new role, as you never know what kind of tenants you may have.
You will also need to be mindful of the ongoing costs of running a property e.g. strata fees, council rates, and property maintenance. Even if you’re flipping a property, you’ll still need to balance budgets, deal with tradespeople, and manage schedules. It can be a lot – so make sure you’re up to it.
5. You’re across the tax benefits
In addition to building wealth and potentially creating a passive income, another benefit of buying an investment property can be the inherent tax benefits. For example, your offset account could be recognised for tax purposes. Also, depreciation, negative gearing, capital gains tax exemption and being able to claim the interest that you pay on your mortgage may all come into play, but do speak to your accountant for advice.
6. You’ve assembled a great team
We’ve already touched on having a smart and reliable accountant or tax adviser. But you’ll need others in your corner, as well. For example: a real estate agent you can trust. The right insurance broker. Maintenance people. Even gardeners and cleaners!
7. You’ve found a great lender!
It really does make sense to shop around and make sure you are getting the best deal for your investment property loan. Why pay extra interest? For that matter, why pay any unnecessary fees?
At Nano, you’ll always be guaranteed a very competitive rate, no unfair fees, transparency around the entire process and extra benefits like an offset sub-account to help you pay down your loan faster, a Nano Visa Debit Card* to make payments and a handy app to manage everything from your phone.
Ready to take the leap and invest in property with Nano?
*The Nano Card is issued by Hay Limited ABN 34 629 037 403 (Australian Financial Services Licence 515459). See terms and conditions.