Property is one of the best possible investments you can make if you know what you are doing, and with the market as it is right now, it’s a great time to be spending money on investment properties. So how do you know if you’re in a financial position to invest in property?

To begin your investment property journey, you need to do a number of things:

  • You need to first work out how much combined debt you have, how much you will need to borrow and how much you can budget for your new investment property.
  • You should have around 20% of the property value ready as a deposit, plus at least 5% for stamp duty and legal costs as well as a bit of a buffer on top. It’s important to allow for at least $50,000 for future cash-flow in case things turn bad with your income.
  • Property investment entails some serious research time and a solid financial commitment, so you must be completely thorough in your research and even more so in your investment preparation.
  • You need to treat a property investment like a business. Buying a home is one thing, buying investment property needs to be bought like you would buy a business, with everything in place to make you profit on your investment.  
  • Make sure you have a quality team around you for advice. This should include mortgage broker or a banker, financial planner, property valuation expert, an accountant, and a builder.

 A lot of potential investors sit around and wait for the market to be right for their terms, however if you wait too long, the market can change that dramatically that you might miss out on some really good investments while you wait. Don’t wait for the market, if you are ready, you are ready.

Always be prepared for the unexpected. This means your backup cash should be safely tucked away, and it also means you should never expect interest rates to stay low. This is the biggest mistake you can make. Budget your property with a very high interest rate in mind, and you’ll almost always come out on top.

Always prepare for the worst-case scenario, and when things go smoothly you’ll get further in front than you imagined.