3 tips to make the most of your first investment purchase
Looking to make your first investment, but don't know where to start? Here are the three places to begin – pay special attention to number three!
1) Buy the right kind of property
Buy properties and hold onto them, accessing their equity periodically and expand your holdings even further.
New, off-the-plan, established, strata, freehold, leasehold, apartment, townhouse, detached, semi-detached, holiday and timeshare – there certainly are a lot of properties out there in Australia right now. What kind is the right for you as a new investor? We'll give you a hint: It's nearly always going to be the first and second one!
New and off-the-plan builds give you all kinds of advantages over established homes, ranging from tax benefits to smaller maintenance costs. Coupled with the legal protections you have in place if working with the right development company, and the benefit is clear.
Always buy new or off-the-plan, and make sure you keep a hold of it. The average home sold for profit in Brisbane was held for 10 and a half years according to the latest CoreLogic RP Data Pain and Gain report – but that doesn't mean you need to shrink your portfolio after a decade. Buy properties and hold onto them, accessing their equity periodically and expand your holdings even further. Your first property is just the beginning, but only if you buy new and hold onto it!
2) Buy with the right person
If the person you are buying with isn't interested or isn't committed, it becomes infinitely more difficult to ensure you make it work.
Property is expensive these days – nobody is shying away from that fact. Both partners in a relationship need to be on board with the homebuying process for it to succeed a lot of the time, and the same can be true for investment property. If the person you are buying with isn't interested or isn't committed, it becomes infinitely more difficult to ensure you make it work.
So what's the trick here? Like most things we suggest here at Think Money, it's all about organisation. Specifically, making sure everybody involved knows what each other wants out of the transaction, and writing up a specific contract to make sure that happens. It's not always necessary when you're buying with a partner, but more and more people these days are deciding to put their money together with friends and family to buy an investment property. It's can be so lucrative that it can be worth the risk.
But you can reduce that risk by buying with the right person; or at least having the right documentation in place to ensure you both know what you're getting into. Do you know the difference between a shared tenancy and tenants-in-common? Start there, or ask your property mentor to find out!
3) Buy with the best advice
Rome wasn't built in a day, and neither will your financial independence. Chris Childs and husband Jack spent sixteen years learning the ropes in the property business, and now you can take advantage of their experience without needing to make the same mistakes.
With the right loan structure and the right money management processes, you can not only expand your portfolio faster but pay off your debt sooner too. Some of Think Money's clients have managed to pay off their debt in only seven years – quite a far cry from the now-normal 30 year mortgage term!
This is the last and possibly most important trick to making the most of your first investment purchase: Getting the right advice. Everybody has an opinion on what you should do with your money, but it's best to ensure you're working with people who know exactly what they are talking about – because they've already done it! Get in touch with Think Money's mentors today to find out more, or come along to our next property investment seminar.