6 tips to break into property investing

Achieving long-term financial security through property investment has become increasingly popular with younger buyers, who recognise the long-term growth potential of the sector and its capacity to generate wealth.

There are several ways in which you can begin your investment journey. These include buying into property funds such as REITs that exclusively invest in real estate and trade on the stock market. This can be a good strategy if you want to be hands off.

More often, though, prospective investors will secure a second mortgage for a property and use their existing home as collateral against which a loan would be set to buy a second property as an investment.

Use a financial adviser to help answer this question. You may find you're not in a fiscal position to own two properties yet, in which case you can build a strategy to get you to that point.

But let's say all the planets align. As experienced local agents, we believe you still have important questions to answer concerning the suitability of any property you buy to rent and your desire to be a landlord.

So let's go through a quick checklist:

Demand equation

Determine the demand for rental accommodation in the area where you'd have your first investment property. Suburbs with high employment or offering good schools, a hospital or university are usually great locations.

Rental income

Ask an agency like our own for advice on current rent levels and occupancy rates. You want to be sure the rent will be sufficient to fulfil your financial obligations. This is known as your rental yield and reflects the income you'll receive as a percentage of the property's value. A sound investment will offer a 5% yield.

Capital growth

Being a landlord isn't just about counting the rent money each month. You also want to see capital growth over the medium to long term. So again, talk to your agent about prices trends in the local area to satisfy yourself that your property will gain value.

Do you want to be a landlord?

Dreaming of becoming a property investor is great, but a few realities come with it. You'll need to budget for maintenance, and you'll occasionally have to pay for major repairs. Good tenants can be hard to find, and eventually, even the best ones leave. So prepare for the property to lie empty on occasion and work with a good property manager.

Ready for commitment

Property investment is not just a financial transaction but a life decision. You can lose money if you don't have a long-term view of wealth creation.

There's always help

A real estate agency's property management team – and we have a great team here – will handle the challenges for you. They'll help set the rent, find the right tenant and coordinate any maintenance work. And when the time comes to renew the lease, they'll negotiate that for you.

If you'd like more advice on buying investment property in our area, please do not hesitate to contact us. We'd be delighted to share our local market knowledge and guide you towards suitable opportunities.

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