Buying an investment property is one of the biggest decisions that you could ever make. Short of deciding to become a parent, it has long term ramifications that far outreach the simple act of signing a contract. Often, it can be a harder decision than buying your own home because you only get financial benefit from it compared to your own home which is both financial, physical and something you may have emotional attachments to.
Before spending thousands on an investment property, here are a few tips worth considering:
Don’t automatically buy near your own neighbourhood. If where you live is going to give you the best rent/growth, fulfils your need from a tax perspective and is essentially an ideal investment area, you’re lucky. You’ll find, on average, there are better investments away from where you live.
Do your cash flows again, and again, and again. Capital growth will generally come over time, however going broke because you didn’t do your budgeting or cash flow figures will negate the long term opportunity because you’ll have to sell before you get a profit.
Take time and get advice, but be careful where the advice comes from. Be aware of how the real estate law works – if you’re talking to a real estate agent they are acting for the vendor – not you.
Have finance approved before you buy and if buying off the plan, be sure about the risks that you’re taking by not being able to get finance until prior to completion.
Do your taxes, and don’t forget to claim all the deductions you’re entitled to.
Source: Financial Spectrum as licensee of Australian Finance and Securities Group (AFSG).
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