What was your 2021 new year’s resolution? Was reviewing your finances and looking at buying an investment property one of them? We’re already into February… but don’t worry, if you haven’t done anything about that resolution, the Chinese New Year on 12 February gives you a second chance to make good on that promise.

What’s more, it’s the Year of the Ox, which apparently is the Year of hard work and determination! If this website is to be believed, in 2021, “you are advised to make wise decisions and choices that will enable you to achieve your goals in life. It would help if you did not give up on your dreams because you have the potential to make something great out of your life this year. This year you should prove that you can achieve anything that you set your mind and strength to”.

This looks very much like to us, it’s time you took a look at investing in property to help achieve your financial goals in life! Once you’ve got that sorted, you can start planning for your retirement or for that trip of a lifetime in a few years’ time.

Even if you already own an investment property, now is the time to look at expanding your portfolio….. here are three easy reminder steps to help you on your property investment journey.

Step 1: Review your finances

Knowing what is coming in and what is going out, and most importantly, what is left over at the end of the month is essential to property investment.

If you are in a stable and reasonably well paying job and have a solid employment history, the chances are you can borrow money.

The introduction of Comprehensive Credit Reporting (CCR) in 2019 means lenders can see the positives of your credit history, as well as the not positives. However, there are other steps you can take to make lenders look more favourably on you, such as paying down your debt.

• The deposit

This is often a sticking point for many. If you haven’t got savings, now is the time to start looking at where you spend your money and putting something away each month. Perhaps too, you might consider selling a few items, or taking a second job for a period of time.

If you already own a property, is there any capital in your property to release and use it as a deposit for another one?

• Speak to a mortgage advisor

Speak to a mortgage advisor to find out what you can borrow or what you’ll need to get yourself into a position where you can borrow. Don’t restrict yourself to your bank – there are plenty of other reputable financial institutions offering good rates to people who don’t fit the criteria for mainstream financial institutions. These include people who are self-employed or on a casual contract or who may have other different circumstances. Interest rates are still very low and there are some great deals to be had.

Step 2: Do your research

OK, so now you know your budget, start doing your research.

• Decide on your strategy

There are realistically two strategies for property investment:

Earn an income: Some investors finance their investment so they receive an income from their property by rental return – ie the income from the rent is more than the cost of running the property. This is known as positive gearing or positive cashflow.

Capital gains: As property usually increases in value over time, you can either sell the property and pocket the gains, or use the property as equity, take out another loan and buy another property for investment purposes.

• Location, location, location

Key points to consider when looking at locations are proximity to transport, good schools, amenities and lifestyle choices, such as parks and restaurants.

But don’t forget to consider the next suburb along from popular areas, or even further afield; while you may get less rental, the property maybe more affordable for your budget, which means your outgoings will be less.

• Type of property

This will partly be dependent on your budget. Two rooms are usually better than one, as it widens appeal. Families will look for probably more rooms and a garden. When looking at properties with gardens, look for low maintenance ones. Other points to consider are whether the property is in a strata or community titled complex as this will mean there will be additional costs to you, and there maybe some regulations which tenants must abide by.

• New vs Old

With property investment, or any investment for that matter, there are a lot of variables and there are several facts to consider personal to your situation – your budget being one of them and your property investment strategy being another.

For instance, if long-term capital growth is your strategy, records indicate older properties in a good suburb often give better long-term capital growth than a new unit in a less desirable suburb. However, records also show the opposite – a new property in a desirable suburb can give better capital growth than an older property in a less desirable suburb.

Step 3: Build your team

It is vital you have the right professional team around you from the start. These are the main areas to look at when building your team:

• Buying the property

A good mortgage broker will get you the best deal on your finance, and you’ll need a good conveyancer to do comprehensive searches and read through the fine print in the contract of sale. Both should advise on any areas of concern and potential risks.

• Tax deductions

A good accountant will know what you can and can’t claim for. It’s also worth paying a specialist to work out a deprecation schedule for your new investment. This is a one-off cost and that cost is often tax deductible too.

• Getting the best from your asset

It is possible to manage a property yourself, but do you honestly have the time for it? It’s not just about knowing the legalities and finding tenants, there’s also the inside experience of knowing how to market the property and screening tenants, ensuring the lease agreement is watertight and rent is paid, and also having a good network of tradies to call on for with maintenance.

We’ve helped thousands of people realise their financial dreams through property. We’re local and family run, and we’re committed to making your property management journey as stress-free as possible. With over 45 years in the business, we have the experience to help you get the best from your asset. We’re always here for an informal chat to answer questions, so give us a ring on 02 49569777 send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office.

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