Property Investing In Melbourne
When starting on your property investing in Melbourne’s journey there are some key steps you must take to help you make the right decisions in the right order. Following a proven process will help you avoid making costly mistakes, making property investing in Melbourne or any other area for that matter a much smoother and enjoyable process.
- This is YOUR fast track to property investment success!
Here are the 5 STEPS TO PROPERTY INVESTING IN MELBOURNE
Property Investing In Melbourne Step 1. Get Clear on Your Goals & Targets
If you are paying off your home one of your first goals should be to get your mortgage paid off as fast as you can. Many people don’t realize that investing in property can be a catalyst to fast track paying off your home years earlier. Problem is, most people have no idea how this works or how their finances need to be structured.
- Pay off the family home in the next 15 years.
- Add 2 Investment properties to our portfolio in the next 5 years
- Pay for our children’s schooling
- Retire at the age of 60yo
- Accumulate $1.5M in assets outside of our home
Before you even consider property investing in Melbourne I suggest getting clear on your goals and targets first. This is the basic starting point before you ever go down the property investment path. So set some clearly defined goals as your first step!
Now, when it comes to investing, the most important question to ask yourself is this…
WHY am I doing this?
It’s a question many investors don’t seem to ask themselves until they’re well into the purchasing process. When I ask people why they’re investing, many respond with a vague answer like ‘to make money’ or ‘to have a property portfolio’ or ‘I thought it was a good idea’!
The problem with answers like this is that ‘having money’ and ‘owning properties’ aren’t goals, they are not linked to their bigger purpose. They’re a means to an end but not an end in themselves.
You might be asking yourself “why does an article on property investing in Melbourne relate to my desire to invest in property?” Read on this will all make sense to you soon….
Knowing Your “WHY” Helps You to Stay Motivated
You see when you understand that property is just the vehicle to help you get the result you look at property investing differently. Your main goals might be less time at work in a job you don’t like, better still quitting your job& retiring early, being able to travel the world, living a comfortable life, supporting your family and loved ones, spending more time doing the things you love. Find your “WHY” for investing in property. The property then becomes your vehicle to get the result!
I highly recommend you sit down and write out your answers to the question…
“WHY DO YOU WANT THIS?”
See if you can come up with 50 or more reasons? That’s what will keep you focused and keep you motivated on your END RESULT!
Over time property investing in Melbourne is the vehicle that helps you get that result through long term growth!
Investor Tip: Obstacles and road-blocks will happen on the investment journey, be prepared by focusing on your big “WHY”
Property Investing In Melbourne Step 2. Getting Yourself Financially Assessed
With your end goal in mind, the next step is to secure finance when thinking of property investing in Melbourne.
I always suggest using an independent reputable finance broker when looking for investment loans. You want someone who knows and understands property, finance structures and how the taxation side of investing works.
A quality broker will help you the-risk your property investment. They will know how to set up cash buffers (in case of emergencies, lack of work, no tenants, etc). He will know how to separate the family home from the investment, he will know and understand your goals and your bigger long-term plans.
They will help you find the loan and the strategy that is right for you. Some options include Interest only, Interest in advance or Principle and interest.
You can also choose from a variety of home loan add-ons at this point, to help make your loan work harder and maximize the earning potential of your investment property. These are Interest Off-set Accounts, Cash Buffers, Deposit Guarantees and the like.
Investor Tip: Minimize your spending patterns at least 3 months before finance applications as the banks scrutinize and assess your borrowing capacity based on your spending habits. When property investing in Melbourne maximizing your borrowing capacity will expand your options when it comes to property selection later on.
Property Investing In Melbourne Step 3: Choosing a location for property investment in Melbourne
Now you have your finances sorted and you know your borrowing capacity the next step towards property investing in Melbourne is choosing the right type of property in the best possible location to help you maximize the returns you want from your investment.
When you’re choosing a location for property investment in Melbourne try to buy in a potentially high growth area and consider the things a prospective tenant might look for. Things like good public transport, trains, trams, buses, plus proximity to shops, cafes, schools, hospitals, universities, and parks can all be important to renters.
Find an area with major infrastructure development planned or under construction. This means jobs for people as they will want to live closer to where they work.
Look at the number of rental properties already in the area. Higher numbers mean increased competition and might limit your ability to earn the rent you want from your property investment in Melbourne. It is a large demographic so you have to do your research well.
Property considerations include the type of property that suits your plans – a house, townhouse, unit or apartment. Finally, the type of property you choose will also determine your potential rental returns.
Property Investing In Melbourne Step 4: Building Your Support Team Who Understand Property Investing In Melbourne
When it comes to property investing in Melbourne nothing can make the process smoother for you than having a hand-picked group of expert advisors who hold your hand and guide you along the way.
On your TEAM you will need a savvy finance broker, a qualified Investment property advisor, a tax accountant who understands property investing and legal deductions, a legal solicitor who specializes in property, a diligent property manager and a tax depreciation specialist.
Better still you need a group of experts who work closely together so they are all working for you as the investor and are all working towards your goals and long-term objectives.
Investor Tip: Interview your potential advisors and make sure they invest in property as well.
Property Investing In Melbourne Step 5: Insuring & Renting Out Your Property
When you are looking at property investing in Melbourne or any other area for that matter it’s important to ensure your investment property as you would your own home – remember, you’re about to become a landlord.
Particular Insurances have been designed specifically for Investment Properties and designed with the needs of a landlord firmly in mind.
Investor Tip: If purchasing an established property make sure you have your insurance activated at least one day before your settlement. Once you settle the property from this day forward insurance is your responsibility.
Renting out your property
The final leg of this step is renting out your property. I would never do this myself (I did when I first started property investing in Melbourne…OUCH!!)
I recommend you always go through a professional real estate agent who will act as your property manager. As your property manager, they’ll screen applicants and manage the day-to-day renting process for you, generally for between 6 -9% of your weekly rental income as their management fee. As with most investment properties, these costs can be tax-deductible.
Investor Tip: While property investing in Melbourne is a long-term investment, it’s good to take an active approach to manage your property. Keeping the following tips in mind to help maximize your returns:
- Regularly review the strategy you’ve taken with your investment home loan and consider which repayment option will work best for your individual needs.
- Review your financial goals to see whether the results you’ve achieved so far have matched your expectations. Is your investment mix still working for you?
Above all take some form of action today, not tomorrow, TODAY, right NOW.
Ready to take the next step?