Sure purchasing your first property can be daunting, especially for young investors. But, knowing how to tackle the market and lenders can be an advantage. So can having your finances in order and possessing the right mindset. Lets look at these points and some others that are critical to successful property investment.
Tip 1 Young Investors Need to Find the Right Mindset
Many young investors think buying property will allow them to get rich quick. They expect to purchase a property; then the money will start rolling in. Unfortunately, property investment takes time and patience before you see results. Therefore, you need to think long-term. You also need to have a 10 to 20-year investment plan in place so you can achieve financial independence.
Tip 2 Develop an Investment Strategy
An investment strategy enables you to fine-tune investing so you dont waste time, effort or money. It will also allow you to be successful. Your investment strategy includes all aspects of investing. It should include the following:
1. Why you wish to invest.
2. Your milestones to achieve your objective.
3. A timeline to reach your goals.
4. How much you can afford to borrow.
5. The types of property you want to purchase.
6. What financial sacrifices you need to make. To be successful at investment, you need to compromise. Otherwise, youll never be able to afford to buy investment property.
7. Know your net worth. When you purchase property your net worth increases. Consequently, after settlement, calculate your worth.
Tip 3 Understand Tax
If you dont know what property investment taxation benefits are, then find out. Contact a financial advisor and an accountant that specialise in property investment. Always keep records and all expense receipts associated with your property. Make the most of any benefits.
Tip 4 Maintain a Good Credit Record
Regularly pay your bills on time, and pay off your credit card monthly. These habits will give you a good credit score. Hence, when it comes time to take out a loan a lender will happily lend you the money.
Tip 5 Making Saving a Habit
Young investors need to look critically at spending habits and where you can save more. Put your extra money in a term deposit. Also, change your spending habits and make yourself accountable. Over time this attitude towards money will pay off. Youll be surprised at how much you can save.
Tip 6 Learn the Art of Negotiation
Often the price of property or block of land is not fixed. As a result, young investors should make an offer that is 10 percent less than the asking price. See where this takes you. If the owner of the property wants more, then meet them half way. Understanding how to negotiate will save you money.
Tip 7 Get to Know the Property Market
Home prices rise and fall, and the property market fluctuates. However, long-term the prices of homes typically increase, some markets even double. Thus, keeping your eye on the market will enable you to understand what the market is doing. Plus, it will allow you to buy in the best locations. Dont purchase any property without conducting market research for a number of months.
Tip 8 Use Your Resources
In a highly competitive market, young investors should consider ways to buy property. Selling assets such as cars is an excellent way to raise enough money for a deposit. Furthermore, you can also enlist the help of your parents and friends. Rather than giving you gifts at Christmas and on your Birthday, ask for cash. Then you can save this. Additionally, you can also buy a home in conjunction with your parents or friends. This approach will increase your borrowing power and enable you to reduce your costs. Your parents can also go guarantor for your loan.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!