Top 15 tips for buying your first investment property

So you’re about to buy your first investment property? That’s great news. Property investment makes a sound investment and is becoming increasingly popular, not just in Australia, but across the globe. However, as a first time investor, there are a number of things that you need to consider and be aware of first, before you put your deposit down and commit.

If you’re considering buying your first investment property off the plan, then this makes an excellent way of entering the property market. Not only can you benefit from cheaper entry prices, but you also have more property options, allowing you to pick from the best of the bunch. A longer settlement time also allows a higher chance of enjoying capital gains before you start having to pay a mortgage.

However, before you leap into property investment and make any hasty decisions, be sure to take the time to do your thorough research and look at the facts in front of you.

To make life easier, here are our Top 15 tips for making your first property investment a success.

Top 15 tips for buying your first investment property

1. Consider the property type first

Do you know the type of property you want to buy? To help narrow down your options you need to decide what it is you want to buy. This could be a one-bedroom apartment or perhaps a two-bedroom townhouse. Do you need parking or a second bathroom? You need to consider all these questions right from the very start.

2. Work out your goals

One of the very first things you need to do is to know what it is you want from property investment and work out some goals. Are you investing to get on the property ladder, or is this the first step towards creating a property portfolio allowing you to retire comfortably?

3. Pay down any existing “bad debt”

If you have any existing “bad debt” such as car loans or credit cards, then it’s best to pay off this “bad debt” as quickly as possible as this can affect your credit history and make lending more difficult.

4. Do you have your 10% deposit?

One of the payments you need to make upfront to secure your property is the 10% deposit. Make sure that you have easy access to your deposit which depending on the developer can be paid as cash, bank guarantee or deposit bond.

5. Understand interest rates can rise

Interest rates might be at an all-time low right now, but that doesn’t mean they are still going to be low by the time your off the plan property is built. Bear in mind that by the time you take on a mortgage, interest rates will probably have risen so you need to ensure that you are able to make the repayments without it becoming a financial burden.

6. Buy comfortably within your budget

As a first time investor (or any property buyer) it is important that you buy a property that sits comfortably within your budget. Buying a property well inside your maximum budget will help reduce financial pressures of not being able to repay your mortgage.

7. Buy in a growth suburb, not somewhere you want to live

Location is also key when it comes to investing, and it pays to invest in a suburb that is about to surge in value. Look out for new infrastructure being built in the future and a suburb that hasn’t seen much growth up until now. As this is an investment property, and not a property you will be living in, you want to buy in an area that is going to perform well to receive the greatest amount of growth.

8. Understand all costs involved – speak to a Mortgage Broker

Do you know all the costs involved when buying a property and when you need to pay these? From the deposit to legal fees, property management fees and insurance costs, you need to budget for all of this when deciding to invest in property. The best thing to do is to speak to a reputable Mortgage Broker who will be able to assist you with your maximum borrowing capacity.

9. Be open to investing interstate

The state you currently live in might not be the best state to invest in right now. If you live in Sydney for example, then the city has just gone through a massive boom and growth phase and it is highly unlikely that Sydney will see the same amount of growth that it has experienced over the next few years. It therefore makes sense to invest in property interstate to take advantage of the growing opportunities there, such as in Brisbane where property prices are also a lot more affordable in comparison to Sydney property prices.

10. Be aware of the tax advantages as an investor

Did you know that buying property as an investor, you can also reduce your taxable income by thousands of dollars? For those on a particularly high tax bracket, an investment property can save you tens of thousands of dollars every year, which means more money in your pocket for property number two. Depreciation and negative gearing are the two largest tax savings, but property management fees, cleaning costs and legal fees are also tax deductible. Speak to a good accountant to see how much tax you could claim back by investing in property.

11. Don’t buy the first property you see – shop around

When buying property, it is important that you shop around first and don’t buy the first property you see. There are plenty of opportunities out there, but you need to ensure that you are buying the best investment, tailored to suit your needs and requirements. Looking at different property options can also help you decide what you like and what you don’t like.

12. Look at the facts

You also need to look long and hard at the facts. You want to invest in a suburb that has low vacancy rates, strong rental yields, good population growth and excellent amenities. You also want to buy a property that is conveniently placed close to transport, schools, retail and parks.

13. Be realistic

When investing in property for the first time you need to be realistic and try not to get caught up in the emotional side of the purchase. You might only have a small deposit so cannot afford that luxurious two-bedroom property by the water - yet. You need to be realistic with what you can currently afford and start off small. The important thing is taking action in the first place and buying something when you can. Once you are in the market, it will be easier to buy more properties, especially if your first property makes good equity growth.

14. Understand the property market

When doing your research, you should also look at what the property market is doing. The Sydney property market is very different to the Brisbane property market and has already gone through its high growth phase. Brisbane is in a rising market with good opportunities yet to come and is a city with investment potential.

15. Speak to a Property Consultant at iBuyNew

Speaking to an iBuyNew Property Consultant can help you work out which properties are right for you, that sit comfortably within your budget. We can provide you with all the latest facts, figures and research to show you why this particular investment property suits you best. Instead of listening to the media hype or friends and family who might not be experts in the property market, it’s best to speak to a Property Consultant at iBuyNew. Book a meeting today to learn more.

Why is your first investment property so important?

Your first investment property can be argued as being the most important property purchase. If you buy the right property, at the right time in the right place then you could experience significant growth. This will allow you to purchase your second investment property sooner and reach your goals faster.

Getting your first investment property wrong could set you back in both time and money, so it pays to get the best advice possible to avoid this happening to you.

It is therefore important that you spend the time carefully researching to find the best first property investment. If you have done your research and buy within your budget, then your risk factor will be a lot lower.

To learn where you should be buying your first investment property, it is best to speak to one of the expert Property Consultants at iBuyNew. Contact us today on 1300 123 463 to find out more and ensure that your first investment property is a success.
Published on 11th of January 2017 by Marty Stanowich
Marty Stanowich
Marty Stanowich


Sign up to the iBuyNew newsletter to receive more article and property news straight to your inbox

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Off the plan

Want access to exclusive opportunities in off-the-plan property?

Sign up to our Free VIP membership for a personalised service.

Learn more