How to buy your first investment property

Buying the right investment property can put you on a high-speed path to financial freedom. As with any large financial decision though, it's critical you get the right advice before you jump in.

Follow these five steps to increase your chances of success.

Step 1 - Talk to a mortgage adviser.

The first step towards securing an investment property is to understand your current position. A mortgage adviser can tell you how much funding you could secure from a bank right now.

Securing finance to buy an investment property generally comes down to two factors:

Total equity - The value of your current home minus the mortgage.

Serviceability - Your ability to cover the cost of the additional funding.

If you aren't in a position to buy an investment property yet, that's ok too! Your adviser can tell you what targets you need to hit to make your dream a reality.

Step 2 - Set a goal.

When would you like to buy your first investment property? Get your family on board and make sure this is a joint decision. Naturally, one of you will lead the charge in making this happen but it’s critical everyone understands what’s involved and that everyone buys into the process.

A typical timeframe for most first-time investors would be 6-12 months.

Step 3 - Assemble your team.

Surround yourself with experts. You are going to need to find an accountant, a building inspector, a lawyer, a property manager and, most importantly, an experienced property investor to serve as a mentor throughout the process.

Ask friends for recommendations, search online, or contact your nearest property investor association to get started.

Step 4 - Decide on your buying criteria.

Do you want a brand new property? Or a fixer-upper? Multi-income or standard family home? There are pros and cons to every choice so consult with your team of experts as you clarify your own criteria.

In general, smaller properties with a simple design are easier to maintain and make a good place to start. Pick one or two locations to focus on so you can understand market values quickly. And if you want to avoid competing with first home buyers, focus on multi-income properties.

Step 5 - Start making offers!

Your team of experts can help you set your criteria and decide whether a property is safe to buy. But deciding exactly how much to offer is up to you. Before you take the plunge, make sure you have done all you can to understand prices in your target location.

Try to view at least 10 other properties in that suburb first. Drive past recent comparable sales and research price estimates and other market data online.

Last but not least, speak to your lawyer before you sign on the dotted line. Make sure you have conditions in your offer to cover any research you need to do before going ahead.  

Get in touch

Ready to start your investment journey? We can connect you with experienced local mortgage advisers, property managers and more. Give us a call to discuss your requirements and we will do our best to help.

Disclaimer: Please seek independent professional advice before making any investment decision. Real estate markets can change and prices don’t always go up.