Six Tips When Buying an Investment Property

March 24, 2017
Graham Bowling


If you’re a first time investor, it can be difficult to know where to start. Buying an investment property is very different from buying your dream home. When done correctly, property investment can be extremely profitable – but it pays to do your research!

Follow our handy tips to realise your investment dreams: 

1.       Research, research, research! Start with the area in which you’re looking to buy and find out:

  • The area’s median house price. This will give you a snapshot of all the property sold in a certain period (quarter / year etc.). It’s a more accurate picture of what is happening with property in the area as it’s reflective of the sample size – whereas average may be skewed if a greater number of expensive houses happen to have been sold during the same period.  
  • How your financial position will be impacted – and how an interest rate increase would affect you
  • The local amenities - including as schools, proximity to shops and public transport?
  • What developments are happening – are there new transport links, or new high-rises being built in the vicinity?
  • The current state of the local rental market.  How many people are looking to rent compared to the number of properties available?

2. Define your rental market – who will your ideal tenant be? Is it families, singles, professionals, couples, or older couples? By defining your market, you can then gauge whether the property you are considering is suitable. If families are preferred, then has the property got enough outdoor space, bedrooms and bathrooms? Will alterations be required?

3. Understand your upfront costs and budget appropriately. Make sure you cater for:   

  • Stamp duty
  •  Mortgage insurance fees (applied if you do not have a 20% deposit of the property’s purchase price)
  • Legal and conveyancing fees
  • Loan application fee (not relevant to all loans, as some lenders do not charge these fees)
  • Building and pest inspections

4. Invest in a property inspection - carrying out a thorough inspection of the property prior to purchasing can save a lot of heartache. Asbestos, pests such as termites, defective structural issues, energy inefficiency are all issues that can be identified during an inspection.

5. Include ongoing property costs – as well as obvious costs such as loan repayments, other costs such as council rates, property maintenance, property management or strata fees, building and contents insurance (if you decide to take it out) and landlord insurance should all be considered.

6. Find the right mortgage lender – Finding the right investment loan can be time consuming and confusing. There are so many variables to consider and each lender has different product offerings. An independent and experienced Mortgage Choice broker such as Graham Bowling at Mortgage Choice North Sydney can take the hard work out of finding the right loan. With access to loans from 27 lenders, your broker will work with you to understand your needs and budget and help you achieve your property investment dreams.

Buying an investment property is a large financial commitment. Whilst it can be a daunting time, with the right team you can feel confident that you are making the right choice for your future.

Mortgage Choice offers a range of home loan options. Contact Graham Bowling and the team at the North Sydney Mortgage Choice today and they will guide you through the process.

Posted in: Property investment

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