We recently chatted to a client who has been investing in residential property for over 25 years. We asked her “What do you know NOW that you wish you knew BEFORE you started investing?” In fact she listed over 20 tips! We thought we would share with you her top seven insights…
1. Know the value of education
Firstly, she wishes she had access to the finance information now available! That’s the reason we love to share our finance tips and articles with you. Our aim is to help you navigate every financial stage of life with usable, educational information. Being financially savvy not only underpins our own future, it allows us to pass on important knowledge to our kids.
2. Be careful who you listen to
(including family, friends, bank tellers, accountants and real estate agents). Many successful investors may never have taken that step if they had listened to the naysayers. If they don’t have more properties than you, then find someone who does. Find your team of experts, research and ask questions. If you are learning something new from them they could be the right person!
3. I wish I had started sooner
We all know our first property is the hardest – you have to make sacrifices. Our client lived on bread and tinned soup, worked 3 jobs during university studies and worked weekends (while her friends were out spending THEIR cash). Time and property prices don’t wait for anyone.
4. I wish I’d bought an investment property before my home
Purchasing an investment property first (while living with parents, family or
renting with friends) may allow you to get into the market earlier than saving for a deposit for your first home. The rental income and the tax man will help pay off your investment property mortgage. This path isn’t for everyone but if you’d like to explore your options we’re here to assist.
5. Location. Be careful where you buy…
If you’re not highly educated about investing in property you can make big mistakes. As a rule of thumb you should stick to good old fashioned location guidelines such as:
• growing capital cities
• confirmed future infrastructure and transport plans
• favourable supply and demand statistics
Choosing the right location is crucial for future capital growth.
6. Pay the LMI to get your foot in the door
If lenders’ mortgage insurance (LMI) will help you get into the market earlier with a smaller deposit it could be worth crunching the numbers. If property prices increase during the time you take to save the additional deposit the price increase will likely be far greater than the LMI you are asked to pay now. It’s worth a discussion with us.
7. Take out landlord insurance
Landlord insurance covers crucial items for investment property owners that may not be covered by other types of home and contents policies, eg theft, malicious damage or vandalism by tenants or their guests or loss of rent due to tenant default. If you have a mortgage on the property your lender may require you to take out insurance before you take on tenants.
Speak to us!
Lastly, make sure you find a brilliant finance specialist – like us – who understands property structuring and finance. We work with you to understand your long term financial goals and the structure suitable for your individual circumstances.
Please be aware however, this article is a personal opinion and NOT advice for you. Everyone’s situation is different. Please read our disclaimer below. It is always important to speak to us BEFORE ACTING on anything you read about financing an investment property.