Common Property Investment Questions

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Whether you’re a new property investor or looking to get into the market, one thing is certain: the entire process can seem a little overwhelming. With so much to think about - including the element of risk, interest rate changes, emotional decision-making, and fluctuations in supply and demand - it can often cause a lot of anxiety and uncertainty.

However, just like any type of risk and reward trade-off, it’s essential to be informed and do your research prior to making any important decisions. By going in with this approach and thinking about the bigger picture, you may be in a better position to make level-headed decisions about your purchasing power where your finances are concerned.

Important questions to ask yourself as a budding investor

We have identified the 6 most common property investment questions that you should ask yourself if you are serious about getting into the market. Read on to find out what they are and how to answer them confidently.

1. Should I dive right in… or delay any action?

It goes without saying that any type of investment is never an exact science. The property market is no exception. For budding property investors, they are either too rash in their decision-making, or they are overly cautious. Both are detrimental to the first purchase (or ensuing purchases).

The best thing a budding investor can do is to find a happy medium: learn as much as you want, but understand you’ll never know it all until you immerse yourself.

2. Do I go with my heart or my head?

When buying your ‘forever’ home, it’s more of a decision of the heart than the head. However, when it comes to investing, it’s common to let your heart rule your buying decision. By thinking with your emotions rather than based on analytical research, you’re more likely to over-capitalise on your purchase instead of negotiating for the best price.

Ask yourself the following questions: will this property provide the gains and returns I want? Is it in a great location to attract the right tenants?

If the answers are yes, then you are on the right track.

3. Should I manage my portfolio on my own?

As a property investor, you’ll have a lot on your plate. From finding your own tenants and organising the collection of rents, maintenance and other administrative tasks, it can get overwhelming.

By hiring a professional property manager, you’ll be able to focus on your next phase of generating even greater wealth while your appointed manager will be able to handle everything else on your behalf. Not only will you get back time but you’ll never have to worry about keeping up to date with any legislative changes pertaining to renting, chasing payments.

4. Have I done my homework?

Just like with anything you do, navigating the real estate markets requires practice and understanding. The cyclical nature of real estate is difficult to master, and still leaves some experts attempting to understand. There’s a big difference between knowing your local neighbourhood and learning about the investment fundamentals of the real estate market. Don’t be afraid to get expert advice from professionals in the field.

It is also worthwhile having the property inspected by a professional to make sure that it will remain a solid investment. If you’re not sure where to start Archicentre are a qualified assessor that can provide a detailed report for a fixed fee.

5. Am I good with cash flow management?

There’s a lot of costs involved in acquiring and holding property. It’s a good idea to speak to a professional accountant who understands real estate investment and can help you navigate all the costs involved before, during and after a purchase.

Don’t forget to also consider shortfalls, such as unexpected maintenance costs and to leave money aside for rates, land taxes, insurance and management fees, should you take on a property manager.

6. What’s my plan?

“When you fail to plan, you plan to fail.” This is an old saying but rings very true in any circle, not least the property market. What do you hope to get out of investing? Build a lucrative portfolio? Retire at the age of 50? Chase short term yields or looking at long-term capital growth?

You will need a plan of attack to help you stay on track in meeting your income goals. Some things to ask yourself include:

  • What are my financial goals?
  • Are they realistic, especially for my timeline?
  • What risks am I undertaking?
  • How can I maximise my wealth creation through property?

 

Are you a budding real estate investor just starting out or with one property already under your belt? You might want to consider landlord insurance. Talk to CCI Personal Insurance today on 1800 107 603 for advice on the right cover for your needs.