Buying your first investment property is a milestone in your life that is unforgettable. Some people think they will never be able to buy an investment property; however, buying your first investment property is more achievable than you realise. When it comes to considering buying within the Perth property market, you need to take a few things into consideration. Gather information together to understand how to invest in WA property.
Here are some important factors to keep in mind when investing in property:
The plan for financing a Perth investment property
There are many ways that you can fund your investment property in the area of Perth. The two main ways are capital growth and rental yield. The former short term is one option, and then you have the longterm option. An investment property that has a solid rental revenue is one that has the rental income going over the cost of owning the home as well as maintaining it. This means it will be positively geared so you will have more money in your hand. Capital growth means that you are getting revenue from the investment home. At the same time, it grows in value over time, meaning you are holding the property in your portfolio for longer so you can get better returns.
It can be hard to predict the trends that are occurring within the property market, where capital growth is better to buy an investment property in, including areas that have upcoming projects and developments, access to public transport and are experiencing population density increases.
All the decisions that are related to choosing the strategy to use come down to the individual circumstances. The rental yield option means you will have fewer upfront costs with a geared property that can help you pay off the home. Relying on capital growth is a longterm, more stable approach. Having an investment plan before buying the property is vital for knowing the right amount you are going to need. Talk to professional investors for Perth property advice if you wish to invest.
When is best to buy?
It is crucial that you make yourself comfortable with the property cycle before you go ahead with any plans. You may be able to capitalise on the swings that are happening within the market. The overall cycle can take up to ten years, and it is quite popular for buyers to commence on action in the value stage, which marks the beginning of the upward turn in the market.
Steer clear of high-interest rates
The cost of borrowing money seems to be cheap this year, but the interest rate that is sitting on an investment property will be higher than the normal mortgage interest rates. If you do decide to finance the property, then you need to look into something with low interest so it won’t eat into your profits too much.
Avoid something to do up
It may be tempting to look for a home that you can get at a good price and turn it into a rental property after flipping it. If this is your first investment property, then that is not such a great idea. If you don’t have a contractor who can do work on the side cheap or you don’t have the abilities to do it all yourself, then you are going to end up forking out way too much to renovate the home. You are better off going for a home that is priced well below the market value that only needs some minor things done to it.