Despite the cyclical nature of the property industry, investing in property is still one of the most secure and effective ways to grow your wealth; particularly if you view it as a mid to long term investment. It is a very different beast to playing the stock and currency markets, but wise decisions pay off handsomely over time for many investors in property.
Below is a brief outline of the steps that need to be taken when purchasing property as an investment.
- Planning – what are you trying to achieve with this purchase?
- Research – educate yourself about the property investment environment: finance options, taxation & depreciation issues. Ignorance is expensive.
- Strategy – select an appropriate investment strategy in line with your cash flow and risk profile.
- Expert Advice – consult with a team of experts who can assist you in the process, from agents, mortgage brokers, financial planners, solicitors, and tax specialists.
- Set up Ownership Structures – set the correct trust structure at the beginning to save expense and angst further down the track as you start to build your portfolio.
- Get Finance Pre-Approved – pre-approved finance will help you in the negotiation process and also save you time, and get you focused on the appropriate price bracket.
- Set up Risk Management Strategies – minimise potential loss, by ensuring you have appropriate insurances, as well as financial buffers in the event of catastrophic economic downturns.
- Buy a Property – this is the exciting part of the process, do not let ‘emotion’ drive your decision, remember this is an investment, so the criteria usually have some key significant differences.
- Wait…Allow time for your property to increase in value: it can take 2-3 cycles to attract substantial capital gain. Patience is definitely rewarded in property investment, it is not a fast ‘get-rich’ strategy.
- Buy again – whilst many investors only ever buy one property, you can continue to buy more properties over time by borrowing against increased equity.
If you are in the market to purchase an investment property, it is highly recommended you talk to us here at Wright Place as one of the first steps in the process; we can certainly assist you, many of our clients are investors who have successfully grown their own personal wealth through property.