If youre a first-time investor or its been a long time since you last bought property, the property hunt can be a daunting prospect. Like any other major purchase, solid preparation helps to ensure a smoother journey.
Think of it like travelling to a foreign place most of us like to know what were wandering into so we can best prepare ourselves, says Stephen Harper, Bankwests executive manager of home lending.
Take the time to understand the property market youre considering entering, and then take stock of your personal situation.
The most important first step in considering property investment is understanding your personal financial situation, Harper says.
Everyones personal circumstances are unique to them, so its a good idea to take the time to consider what you can afford, while still having enough to live life in a way you enjoy, he says.
Lending Loop broker Stephen Watson encourages would-be investors to think not only about their current circumstances but their plans for the medium and long terms.
For example, you might be a first-home buyer, or just recently married and need to think about if youre going to have children and maybe go down to one income for some time, he says.
Buying a property is often the most significant financial decision a person makes in their life and Harper says its important to treat that situation with the respect it deserves.
Its easy to become emotionally invested and involved when making such a large financial decision, and that can sometimes cloud our judgement, he says.
This is when its important to buy with the head, rather than the heart.
Watson says investors should focus on the financial return.
Whats really important for investors to understand is that theyre buying this property to essentially make money at the end of the day, he says.
This means buyers may need to look beyond 20 kilometres of where they live in order to achieve their investment goals.
Apart from regular mortgage repayments, there are a host of other costs associated with buying property and becoming a landlord, and youll need to be aware of each of these before you commit to a loan.
Expenses can include lenders mortgage insurance and bank settlement fees. Watson says its worth noting that a broker may be able to secure a reduction or waiver of these fees.
Other costs include pest and building inspections, conveyancing fees, home insurance, body corporate fees for strata property, council rates, land tax, maintenance costs and property management fees.
If youre using a buyers advocate to secure a property a strategy Watson recommends youll also need to pay for their services.
Watson encourages investors to use data to narrow down the best locations within their budget.
Important things to note include the split between owner-occupiers and renters in any given area, population growth, the nearby amenities such as public transport, shopping centres and schools and the vacancy rates and rental yields.
From flexible repayment options and interest calculated daily to offset accounts and redraw facilities, its important to choose a lender with the features and services to suit your circumstances.