3 Steps to Get Onto Property Investment Ladder

It is the Great Australian Dream to own your own house, but an ever-increasing part of this dream is to have a portfolio of investment properties in Australia. As more of us inspire to enter the world of property investment in Sydney, it is vital that we have undertaken research and analysis in order to make the most wise and lucrative decisions possible.

Property investment in Australia can indeed be lucrative, but you must have a strategy and have defined financial goals. In many parts of this country, a shortage of quality rental properties is being seen and prices continue to rise in most markets. This means that, when informed by the best available evidence and when you select the right property and keep abreast of your financial situation, your property investment can see you enjoying financial rewards.

So, what do you need to do to not only embark but also ascend the Sydney investment property ladder?

1) Recognise that property investment is long term.

The purchase of an investment property comes with a range of additional costs, including: stamp duty and legal fees. Don’t overlook that when a property is sold, real estate agent fees, particular taxes and even advertising costs can be incurred.

Approximately five to seven per cent of the property selling price will be swallowed up by additional expenses. Selling often can therefore prove expensive and is not really conducive to financial growth.

It is most wise to approach a property investment as a component of a long term investment portfolio.

2)  Select the right investment property.

There is absolutely no point in buying a property that is not appealing to tenants. The following are important considerations for investment properties:

  • Location – Investment properties situated near transport links and amenities such as: shops, schools, hospitals, parks and recreational facilities will always be popular and will usually offer good potential for growth.
  • Appeal to tenants – Properties that are clean, secure, offer easy access, have low maintenance outdoor spaces, plentiful light, good ventilation and sufficient storage space, will always appeal to quality tenants. If a rental property also offers off-street parking, this will be viewed favourably by most prospective tenants.

3)  Know and understand your financial situation.

For most of us, the purchase of an investment property is not wholly done with our own money. A mortgage (and therefore negative gearing) is most often required.

Negative gearing means that you borrow to invest. The primary reason for doing so is that you are able to acquire an asset that is worth far more than you would be able to afford with only your own money.

Regardless of how you raise the funds when buying an investment property, it is vital that you completely understand the financial commitment that will be required of you, as well as the fees, charges and expenses that you are likely to incur as a landlord. So long as you are accurately informed of your financial situation and how it will change as a result of the purchase of an investment property, you can make plans to accommodate this.

Property investment is a great way to improve the financial situation of a person, provided that they make decisions based on evidence and are strategic in approach.

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