A good financial strategy can make investing in property very rewarding, but don’t settle for a one-size-fits-all approach, says Angela Dye.
The investment route There are no magic tricks to investing. It is paramount that you understand your financial position, know the reason behind wanting to invest, and have an exit strategy in place.
There are many reasons why people decide to invest in property, but before you make a decision you should consider the following:
Your finances — can you really afford to invest?
Your why — what are you trying to achieve?
Your exit strategy — what’s your plan B?
Some of the most popular reasons for buying investment property include the desire to maintain your current lifestyle, or building a property portfolio to have some form of financial
security when you stop working. Whatever your reason, if you are crystal clear on your “why”,
then you have a great starting point.
There are many factors that need to be taken into account when deciding on the property in
which to invest. You should consider the type of property — do you want a stand-alone house, or perhaps a townhouse or unit?
What area will you buy in?
What is the infrastructure of that area?
What price range do you want to buy in?
Do you want negative gearing, positive gearing, or cash flow?
There are many professionals who offer services that can assist you with the process. These include financial strategists, solicitors or conveyancers, real estate agents, mortgage brokers, accountants and financial planners. They will help you to understand the best structure for your investment, your property ownership, and the legal requirements of your purchase.
It is important to understand your financial situation as it stands today and the impact that an investment in property will have on your current standard of living. There are many types of investment strategies, and by seeking the guidance of a professional to help build the foundations of your own property investment strategy you will see that there is no magic formula to investing, and that someone else’s strategy will not necessarily work for you.
Listen to the professionals’ advice carefully and ask as many questions as you can — the more you understand the process of investing in property the more control you will have.
Before you sign any contracts to purchase a property you need to know that you can satisfy
the requirements for obtaining a loan. There are two important loan requirements:
Can you repay the loan?
What is the value of the security?
Investments of any type always come with risk, so make sure you have plans in place and are
well informed to help mitigate these. A good loan structure and having buffers in place can
help to lower the risk, giving you the security in knowing that you have a planned exit strategy
should the need arise.
Property investing should be an exciting and rewarding experience. When you are fully informed and have developed a strategy that caters to your personal financial situation your
decisions should be easier.
Don’t procrastinate and sit thinking “what if ” or “maybe this time next year”. If you have
adequate finances, have done your homework, and have an exit strategy in place there is no time to sit on the fence any longer — jump over it and see what is on the other side.
Ask Ang about your property investment options.