Common challenges of a first time investor
The Great Australian Dream is to own your own home but no one said you had to live in it. The property market is one of the key avenues for investing and growing your portfolio. For seasoned investors, it’s all about taking calculated risks but for newbies, these risks become less calculated with a lack of research and knowledge.
Property jargon and what to look for in an investment can make the process more of a learning curve than a money maker. The Roos veteran, Drew Petrie learnt this the hard way with his first investment. The property was located in Ballarat and over 4 years, he only managed to break even. Since then, Drew has managed to invest in other properties that made his portfolio flourish.
So what are the common challenges of a first time investor and what should you look for? Whether you are “rent-vesting” or investing in a second mortgage, you’re not alone.
Mortgage pay off
You’re ready to get into the investment game, but what about the first mortgage you have? Can you afford to pay two mortgages or should to work to pay off the first one beforehand? The obvious first step is looking at your budget, your expendable income and if you can consolidate any current debts. The next would be to truly understand the costs associated with being an investor, including ongoing costs of tenants etc.
Really ask yourself, is this something you can afford with a second mortgage?
The property market is an ever-changing cycle. Houses prices go up and down and without research and knowledge, this is a hard thing to predetermine. Understand the property cycles before buying and see if you can find these trends in areas around you.
Try broadening your search to areas that are hot topics in the industry, which may not be close by. Keep up to date with auction results and make the risks you take as calculated as possible. A stab in the dark isn’t a great idea when you are dealing with hundreds of thousands of dollars.
Finding digestible information
Investment information is everywhere. Everyone has their take on the market, how to invest and what to look for in a property. Deciphering this info isn’t as simple as reading a few articles online. Try meeting with the professionals for expert advice. From real estate agents to conveyances, seeking advice as well as your own thorough research will help you understand the ins and outs of your decision.
This could be a pricey exercise but a little upfront cash now is better than losing thousands on an investment. Assessing your budget, the market conditions and chatting with the experts is 3 steps in the right direction for any first time investor.