Investing in property is about managing opportunities and risks. By making an informed decision about property investment, you are taking charge of the potential financial rewards, but also possible losses. It’s crucial to gather comprehensive knowledge and ask the right questions to make an investment that suits your financial goals.
What is it?
When we invest in property we generally mean real estate which is land and things attached to the land for example buildings and natural resources. This may include residential properties like homes, units or apartments; or commercial real estate such as office buildings, shops and factories. We will focus here on residential properties.
How do you invest?
Individual properties, such as a residential or commercial property, are usually bought through an estate agent, using the services of a lawyer or property conveyancer, often with a loan (mortgage). See managed investments for details on how to buy units in a property fund.
Where to get more information
Real estate websites offer news and insights on the property market. News websites also often have a property section or blog with tips on where and what to buy. Banks and brokers may also offer property investment guides.
You can compare managed funds on comparison websites such as Canstar.
- Suitable for longer-term investments due to high entry and exit costs
- Choose information sources carefully, some sources, such as property developers and associated companies, may have ulterior motives
- When choosing an investment property, consider your target tenant, what facilities could they want close by, eg. transport, recreation, schools, shops. Look for areas where there is a high demand for rental properties
- Buy in a market you are familiar with or have researched extensively
- Consider estimated rental returns, future capital gains, and ongoing property expenses. Don’t underestimate ongoing costs
- If the property will be negatively geared (running at a loss), make sure the shortfall is within your budget
- Plan for periods of time without a tenant – 6 months’ worth of expenses may be an appropriate emergency fund
- Research could include the local council for plans for the area, flood plains, flight paths, and bushfire zones
- Choose for the investment potential, not what fits your personal taste