Com­mon chal­lenges of a first time investor

Wangaratta Chronicle - North East Property Guide - - NEWS -

The Great Australian Dream is to own your own home but no one said you had to live in it. The property mar­ket is one of the key av­enues for in­vest­ing and grow­ing your port­fo­lio. For sea­soned in­vestors, it’s all about tak­ing cal­cu­lated risks but for new­bies, these risks be­come less cal­cu­lated with a lack of re­search and knowl­edge.

Property jar­gon and what to look for in an in­vest­ment can make the process more of a learn­ing curve than a money maker. The Roos veteran, Drew Petrie learnt this the hard way with his first in­vest­ment. The property was lo­cated in Bal­larat and over 4 years, he only man­aged to break even. Since then, Drew has man­aged to in­vest in other prop­er­ties that made his port­fo­lio flour­ish.

So what are the com­mon chal­lenges of a first time investor and what should you look for? Whether you are “rent-vest­ing” or in­vest­ing in a se­cond mort­gage, you’re not alone.

Mort­gage pay off

You’re ready to get into the in­vest­ment game, but what about the first mort­gage you have? Can you af­ford to pay two mort­gages or should to work to pay off the first one be­fore­hand? The ob­vi­ous first step is look­ing at your bud­get, your ex­pend­able in­come and if you can con­sol­i­date any cur­rent debts. The next would be to truly un­der­stand the costs as­so­ci­ated with be­ing an investor, in­clud­ing on­go­ing costs of ten­ants etc.

Re­ally ask your­self, is this some­thing you can af­ford with a se­cond mort­gage?

Mar­ket con­di­tions

The property mar­ket is an ev­er­chang­ing cy­cle. Houses prices go up and down and with­out re­search and knowl­edge, this is a hard thing to pre­de­ter­mine. Un­der­stand the property cy­cles be­fore buy­ing and see if you can find these trends in ar­eas around you.

Try broad­en­ing your search to ar­eas that are hot top­ics in the in­dus­try, which may not be close by. Keep up to date with auc­tion re­sults and make the risks you take as cal­cu­lated as pos­si­ble. A stab in the dark isn’t a great idea when you are deal­ing with hun­dreds of thou­sands of dol­lars.

Find­ing di­gestible in­for­ma­tion

In­vest­ment in­for­ma­tion is ev­ery­where. Ev­ery­one has their take on the mar­ket, how to in­vest and what to look for in a property. De­ci­pher­ing this info isn’t as sim­ple as read­ing a few ar­ti­cles on­line. Try meet­ing with the pro­fes­sion­als for ex­pert ad­vice. From real es­tate agents to con­veyances, seek­ing ad­vice as well as your own thor­ough re­search will help you un­der­stand the ins and outs of your de­ci­sion.

This could be a pricey ex­er­cise but a lit­tle up­front cash now is bet­ter than los­ing thou­sands on an in­vest­ment. As­sess­ing your bud­get, the mar­ket con­di­tions and chat­ting with the ex­perts is 3 steps in the right di­rec­tion for any first time investor.

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