Becoming a property investor isn’t particularly hard or complicated, but many people get it wrong because they skip some of the important steps at the beginning of the property investment process and jump straight into the property search. Following three basic steps can help you avoid the common mistakes and show you how to invest in real estate successfully.
Step one is the most important: sort out your finances. First, contact a mortgage broker to help you find a loan that will suit your specific needs and financial circumstances. A broker will do all the legwork for you – usually for free – and there’s a good chance they’ll be able to get you a better interest rate, too.
Secondly, understand the financials. Again, this is often overlooked – but it’s vital, as it will guide your whole investment strategy. Step two involves putting together a full financial report that shows investors’ incoming earnings and outgoing expenses; for example: cash flow, property and loan costs, rates and insurance. The report will also show rental yield, tax benefits like depreciation and, most importantly, your net income plus potential capital growth.
It sounds complicated, but once all the figures are laid out, it becomes clear. It’s often a light-bulb moment when people say, “Ah, now I get how it works.”
Once you’re happy with the financial set-up in steps one and two, then step three – choosing a property – is easy and, obviously, a lot more fun.
Investors who haven’t done their homework on the financials will feel nervous about the whole process – this is how mistakes are made. But if you follow this simple three-step advice, you’ll be well on your way to making money from property.
For more information, contact Jason Dwyer from Dwyer Property Investments on 1800 088 437.