Properties are stable, secure, and visible assets ideal for anyone looking for a reasonable long-term investment. Investing in properties can earn you rental income to help you manage mortgage repayments and other expenses.
Investing in real estate properties also allows you to grow your investment portfolio. Better still, you’ll enjoy capital gains if you decide to sell the property in the future. And if you decide to buy a property in Australia, you’ll need a real estate agent to help you find the right property that suits your goal and needs. You may visit this website to compare local real estate agents and their fees.
Although the Australian real estate market offers numerous benefits; investors should consider the risks involved before buying properties. So, if you’re an investor who fancies a property in Australia, here are some valuable tips you need to know:
- Clarify Your Investment Goal
Before you invest in a property in Australia, you need to be clear on what you want to achieve with the investment. As you consider the benefits that the investment is likely going to bring you, be realistic. Ensure you’re financially secure and that you can make loan repayments comfortably without straining your lifestyle.
Review the risks involved and ensure you have measures in place to manage them. Some risks that you need to be wary of include a drop in property value and income rent that may not meet your expectations. The property might also have liens or encumbrances that you might not have known about. Before investing in a property in Australia, consult real estate professionals and lending specialists to see whether it’s worth investing in one.
- Decide How You’ll Manage The Property
If you live far from the investment property, you’ll need to think about its management even before you purchase it. Consider getting a real estate agent or property manager to help you manage it and budget for management fees.
Further, consider the costs you’ll be paying on a regular or ongoing basis. In Australia, property owners pay council, strata, and water rates. Also, allocate a budget for repairs and maintenance, insurance, and land tax. If you plan to rent your investment property out, consider budgeting for advertisement, renovations, and vacancy costs as well.
- Consider Extra Costs
When buying an investment property in Australia, you need to pay attention to the extra costs you’ll need to shoulder in addition to the price of the property. Such charges include legal fees, stamp duty, and pest and building inspections. If you plan to finance your investment through a mortgage, consider the loan set-up costs. Further, find out what costs you’ll need to cover if you decide to sell the property. Such costs may include real estate agent fees and capital gains tax.
- Consider Your Budget
If you plan to invest in a property in Australia, consider working with a budget that’s within your means. Most mortgage lenders require deposits of 10 to 20% of the purchase price. So, make sure that you can raise this amount. Also, have the upfront cash to cover conveyance and legal fees, stamp duty, maintenance costs, and interests on the borrowed amount.
Evaluate how the cost of borrowing will affect your investment. In addition, evaluate your interest rates and how those might fluctuate in the future. Better still, consider having a fixed interest rate for a portion of the loan to lock in some of the interest costs for some time.
- Evaluate Investment Alternatives
Individuals who plan to invest in the Australian property market also need to consider the alternatives available. It’s advisable to go for investment opportunities that allow for purchasing a section of a property along with other investments. You can achieve this by channeling your property investment through Australia’s Stock Exchange.
The benefits of exploring this option include opportunities to diversify your asset portfolio, enjoy greater liquidity, and reduce transaction costs. The downside of this investment alternative is high volatility due to fluctuating share prices.
Final Thoughts
Buying a property in Australia is an excellent investment for anyone who wants to grow their portfolio. If you wish to invest in a house or an apartment in the country, you need to research the Australian property market before putting your hard-earned money in it.
This is critical in helping you understand the opportunities, financing, risks, and other additional costs that you might need to take care of before and after the purchase. Applying the tips above will also help you identify alternative property investment vehicles that you can leverage in Australia.