First-Time Investor Tips

If you’re a first-time property investor, there are likely many things you need to learn. From understanding the areas you’d like to buy in, to funding your first investment, it can feel overwhelming. However, with some research and consideration of your long-term goals, you can overcome some of the fear and doubt that may be causing you to second-guess getting started. Keep reading for some top tips for first-time property investors.

Make sure you’ve got enough capital for the deposit

Buying a property as an investment typically requires a larger deposit than purchasing a property to live in yourself. To avoid slowing the process down when making an offer and getting approved for a property investment loan, calculate how much you’ll need for a deposit for your desired price range. And if you’re funding the investment by leveraging the equity in your primary residence, remember you can only borrow up to 80% of the property’s value.

Consider land value as well as the building structure

Buyers and investors often spend a lot of time and effort focusing on the dwelling they want to purchase. While ensuring the property structure is in good condition and will appeal to prospective tenants is important, you also need to consider the land. Looking for properties in well-located areas with a relatively low risk of oversupply can help drive future capital growth. In short, the upfront tax benefits of investing in new property may be appealing, but sometimes, the better long-term move is to buy blue-chip property in a blue-chip location.

Understand your risk tolerance

Like any investment, various degrees of risk are associated with holding the asset. An asset with a higher degree of risk may generate a higher reward. It’s important to understand your risk appetite and navigate your property investing journey accordingly. For example, you may be someone who can withstand the potential peaks and troughs of investing in holiday rentals in coastal locations. In contrast, you may not want to hold the potential risk of low or no rental income in off-peak seasons, so investing in an urban area that’s popular with a range of demographics may be a better option. There’s no right or wrong. You just need to consider your long-term objectives and invest according to your unique risk appetite.

Don’t forget landlord insurance

Sometimes, the unexpected happens. A tenant may be unable to pay their rent, your investment property gets damaged, or a tenant breaks their lease. Landlord insurance will cover you for these scenarios and more, providing peace of mind that if you’re facing losses due to an incident you’re covered for, you shouldn’t be out of pocket by a significant amount. Some policies start from as little as $1.50 per day, so it’s a worthwhile price to pay for managing the risk of owning an investment property.

There’s lots to think about when you start your property investment journey. From knowing how much you want to spend to deciding on your long-term goals, doing your own research and speaking with qualified experts is critical. If you’re just getting started, use the tips above as a jumping-off point to identify where you need advice and support.

Remember, this article is general in nature and is not financial or legal advice. Please consult 

your professional financial and legal advisors before making any decisions for yourself.