Careful research is the key to property success. From the initial decision of how much you can afford right through to locating the right property to purchase, research will help ensure you select a profitable investment. Here are the research steps you need to take to help achieve investment success.
Step 1: Financial Research
Setting a budget and organising a home loan is the first step towards purchasing a property. First, you must research the exact amount you can afford to spend. To do so, simply list out all of your assets (including cash on hand) in order to work out your expenses. The result will provide you with the amount you can afford to spend on a deposit and home loan repayments.
Once you have established your financial position, your next step is to speak to a trusted mortgage broker. (Visit our blog on Mortage Broker vs Bank to learn more.) They will help you select a loan product that is right for you and your budget.
Step 2: Property Type Research
The second step is to decide on the type of property you wish to invest in. The amount of money you have to spend will impact the type of property you look at purchasing. However, you should research all types in order to make an informed decision on which choice is right for you.
The decision between residential, commercial or industrial will depend on your financial needs. The decision between unit or house will depend on budget requirements. And, finally, the decision between your own home or investment will depend on personal needs.
If your purchase is an investment decision, then all property types may be suitable. In this case, your return on investment will be the impacting factor in this decision. What you need for it to be financially viable and profitable will impact your purchase.
Step 3: Location Research
If you are purchasing your own home, this step is about researching a suitable suburb that fits your lifestyle needs now and in the future. If you are purchasing an investment property, this step requires you to consider locations that have the best capital growth potential and that will give you the best possible return on your investment.
Remember, even if you are buying your own home, a savvy property purchaser looks at the investment potential of their purchase as well as whether or not it suits their needs. A home is an investment as well as a lifestyle choice.
The key is to find locations with capital growth potential and then focus on finding a property within that area that fits your budget. Here are some elements to consider that may affect your purchasing decision:
- Suburbs with steady capital growth;
- Adjacent suburbs to already popular locations;
- Distance to amenities (schools, shops, public transport, CBD, etc.);
- Locations popular for potential tenants;
- Demographic of the area; and/or
- Upcoming developments in that area (good or bad).
Step 4: Viability Research
Now that you have established a budget, a property type and a shortlist of preferable locations, you need to narrow down your research to find suitable properties that you can begin inspecting.
The property you choose to purchase should have been researched thoroughly prior to your decision to buy. Part of this includes determining the right price of the property so as not to overspend. You can do this by adequately researching the sale prices of comparable properties in the same area.
If you are looking to purchase an investment property, you also need to do your research with local real estate agencies to determine what you can expect in terms of rental return on that property. Your aim for rental return is that it should cover all of the property’s expenses (including mortgage). This will help you to determine if it is financially feasible and suits both your budget and goals.