If you have been considering building a property for investment over the last few years, but have held off because the conditions in the home loan and property industries haven’t been great, then this year might be time to finally take the next step. With interest rates at record lows, and being expected to fall further during 2020, Western Australian investors are looking at the perfect conditions for building an investment property.
As well as the favourable interest rates being offered, finance is finally becoming easier to get. Over the last few years home loan providers have been extremely cautious when approving finance, with things in the property market looking promising they have finally relaxed their strict criterias. To add to all this good news, property prices are expected to rebound over the next 12 months, making it the perfect time to get your foot on the property ladder, and to make a decent profit. Of course rushing into property investment is never a good idea, and there are some common mistakes that investors tend to make.
Not Taking The Whole Process Seriously
This is one mistake that is easy to make. There is no doubt that embarking on your journey as a property investor is exciting, but it is not the same as building a home for yourself. If you are wanting to make a profit, then you need to understand that investing is a business. Rushing in and not doing your research will not serve you well, putting in the work now will ensure you come out on top.
These helpful tips will get you started on the right path:
- Get to know your builder, they can help you choose the right design for your needs. Ask what is included? Are siteworks going to cost extra?
- Make sure you understand the whole building process.
- Study the property market closely.
- Don’t make emotional decisions, think of everything in a financial capacity.
- Maintain accurate records.
- Keep track of the property’s rental growth and value.
- Make sure you are aware of any council or strata matters that will affect the property value and rental value.
Getting The Wrong Advice
If you want to make informed decisions you need to seek out proper advice. Although it is ok to listen to the opinions of family and friends, you should not make any big decisions without talking to an expert. There are many reputable experts in the field of property investment, making use of their knowledge is a great way to ensure you don’t make unnecessary mistakes. This is especially important when it comes to finances, find a bank that suits your investment:
- What is your budget?
- What will your repayments be?
- What are your deposit options?
Choosing The Wrong Property
Although you may prefer to invest in a house, if there is more demand for townhouses in the area you are building in then you need to consider this. Invest in what tenants will want and not what you prefer, the wrong property can lead to long vacancies and low rental yields. Research the rental demands in your chosen location before you commit to building anything. It is also a good idea to thoroughly explore the suburb you intend to build in. Look closely at growth and rental income stats, and make sure there are sufficient local amenities such as shops, schools and public transport.
Content Living is one of the most reputable Perth Home Builders. If you have any queries regarding building your own investment property, we are happy to advise you on your options. Contact us today!