When you’re risk averse and want to invest in property, you want to make sure you thoroughly research both the property and the location before you sign the dotted line.
We totally get this!
Investing is a big step to take and you want to be as sure as you possibly can be that you’re making a great decision. So we’ve created a checklist to help calm the nerves and rest your mind.
1. Invest in low risk areas. For instance, if you were choosing to invest in a town that promised great return on investment yet the economy was dependent on one industry, ie, mining, you might look elsewhere. We need to look at both the demographics and economic fundamentals – such as infrastructure investment, employment and forecast population growth. We’re not looking for boom towns. We’re looking for slow and steady sure performers.
2. Use your head, not your heart – or your ego. When you’re buying a home your heart often rules the decision. Sometimes your ego gets in the way, wanting to invest in an area that is popular amongst your peers, or familiar to your family. It’s time to put that aside and look purely at the numbers. The cost, the cashflow, the infrastructure investment, forecast population growth, employment rate, rental demand and yield. When those numbers add up, your head, heart and ego can all win!
3. Diversify – we’re all told not to put all our eggs in one basket, and it’s the same with property investing. If you’re planning on building a property portfolio, look at different property types in different locations so that you spread any risk. I have one client who invested in a townhouse in Maroochydore that quickly exceeded her expectations, so we found a one bedroom apartment in Melbourne for her. Both are performing extremely well so we’re planning on her next property to be in the Newcastle area. Her portfolio is balanced and she has minimised her risk by diversification.
4. Get a great mortgage broker – they can advise you on options to structure your loans, ensure your loan to value ratio (LVR) is appropriate to your circumstances, discuss options to repay principal and interest or principle only. A great mortgage broker can make a huge difference to your bottom line and stress levels.
5. Invest for the long term – and take a long term view. Unless you’re a builder or master renovator flipping houses, property is usually a long term investing option. Don’t get caught up in the peaks and troughs of the market and the property cycle. Remember that the only time the value of your property is important is when you’re either selling or refinancing. In the meantime, ride the waves of the peaks and troughs and keep your eye on the end goal.
The best part of using a consulting service such as Love Property Australia is that we’re independent of all developers and vendors and work for you to do the research, find the property that meets your investing strategy and we’re here to support you through every step of your journey.
That in itself should put some ease into the minds of risk averse investors.
