10 Things to Consider Before Investing in Property

If you’re interested in property investing, here are some general factors to consider to help you.

Thinking of exploring the world of property investment? While investing can be an exciting and lucrative venture, it’s essential to approach it with caution.

Before you embark on your property investment journey, consider these ten questions to help you make smart investment decisions .

1. What are your financial goals?

First up, you’ll want to get clear on your financial goals and objectives for your property investment.

Before developing your investment strategy, think about whether you’re looking to secure capital growth, would like to earn rental income, or are aiming for a combination of both.

In addition, you’ll want to determine your investment timeframe and risk tolerance, which will both influence your decision-making process.

2. Is your budget realistic?

The questions of budget and affordability are key to making a sound investment choice.

Carefully assess your financial situation and establish a realistic budget. Consider factors such as the amount of savings you have, your income and expenses, and your borrowing capacity.

Make sure that you can comfortably afford both the upfront costs and ongoing expenses associated with property ownership. You should consider speaking with a financial advisor for expert advice.

3. What is the best suburb to invest in?

Location, location, location. When it comes to investing in property, choosing the right area in which to buy is key.

As the location will have a major influence on the property’s investment potential, you should research different suburbs and regions to identify areas with strong growth prospects, good rental demand, and convenient access to amenities.

As well as looking at the current advantages - such as proximity to schools, public transport, shops and employment hubs – you might want to consider any upcoming developments in the area.

4. What type of property is most suitable?

Before starting your search for an investment property, you’ll need to decide on a property type that aligns with your investment goals and budget.

From new or existing homes to apartments or commercial properties, each property type comes with its own set of advantages, drawbacks, and legal considerations.

When choosing a property type for your investment, consider factors such as rental yields, vacancy rates, and potential for capital growth.

5. Have you done all your market research?

When you are on the path to property investment success, don’t underestimate the importance of comprehensive market research.

The more information you have, the better equipped you’ll be in making your investment choice, so research and analyse factors including historical sales data, rental yields, and vacancy rates in your target area. 

You should also keep up to date with economic indicators and government policies that may impact the property market.

6. Are you satisfied with the property inspections?

Whether you choose to attend the inspection yourself or enlist the services of a professional, conducting a thorough inspection of any potential investment property is a crucial stage in your journey.

You’ll need to look for signs of structural damage, pest infestations, and any maintenance issues that may affect the property’s value or rental income potential.

If you’re new to property investing, getting a buyer’s agent on board to help can be beneficial, as they will know what to look for and can help with complex documents such as building reports.

7. What is the rental demand?

If you’re planning to rent out your investment property to obtain rental income, you should assess the rental demand in your target area.

When looking at rental demand, some factors to consider include population growth, employment opportunities, and lifestyle amenities that attract tenants to the area. 

A property with high rental demand is more likely to generate consistent rental income and minimise vacancies.

8. What is your likely return on investment?

As a key consideration in your investment decision, you should calculate the potential return on investment (ROI) for each investment property you’re considering.

To do this, you’ll need to factor in aspects such as rental income, capital appreciation, expenses such as property management fees, maintenance costs, and taxes. 

In order to maximise your ROI, you’ll want to aim for a positive cash flow or a property that offers strong capital growth potential.

9. Should you use a property manager?

While you may be tempted to keep costs down by managing the property yourself, investing in the services of a professional property manager can help make the ongoing management of your investment property easier.

Professional property management agencies can take care of a range of tasks associated with the property, including finding tenants, collecting rent, and handling maintenance issues.

Aside from saving you time, professional property managers will also have the expertise and experience to manage your investment property, so it’s worth considering this option.

10. Do you have an exit strategy?

Having a clearly defined exit strategy is a key consideration for your property investment journey, and it’s important to prepare for various scenarios.

Whether you plan to hold the property long-term, sell it for capital gains, or use it to generate passive income in retirement, it’s a good idea to have a strategy that is suited to your financial goals and timeline.

A planned exit strategy will allow you to adapt to changing property market conditions and to stay flexible based on your personal circumstances and goals.

Property investment can be a path to financial success – but you should make sure your decisions are based on research, careful planning, and a strategic approach. 

By taking your time and conducting all necessary due diligence, you can choose an investment property that meets your goals, now and in the future.

Looking to learn more about the property investing? Check out our series of buy a home articles

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking independent taxation and financial advice before making any decision based on this information.‍

Tax law is complex and subject to change. For the latest information, check the ATO website or with your accountant or financial advisor.‍

Unloan is a division of Commonwealth Bank of Australia is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.‍

Applications are subject to credit approval; satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000.‍

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.‍

There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.‍

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.

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