Building Investment

There are so many things to think about when starting a property investment portfolio. Every investment strategy has a benchmark guideline that provides advice, information and general recommendations on the chosen strategy. Here are 7 general rules to consider when looking at building your investment home.
 
1. Know your budget
 
Before investing in property it’s vital to have a thorough understanding of your cash flow. Also, it’s a good idea to have spoken to your bank or mortgage broker and have an idea or a pre-approval of how much you are able to borrow before you start looking to build your investment property.

2.Look to build in a growth area
 
Endeavour to select and area to build your investment property where there is a strong demand for rental accommodation. Buying a property close to established infrastructure such as transport,universities and schools will make it more attractive to renters.
 
3. Be realistic about your investment goals
 
It is important that you have a goal for the type of investment you are wanting to build. Are you looking for fast capital growth or wanting to hold the property long-term? If you are looking for long term investment, you will have the luxury of purchasing in areas which do not yet have all the infrastructure or may be a little further in distance. Generally land in these areas is cheaper and entry prices for house and land are excellent.
 
4. Build your investment property with your head not your heart
 
When selecting a house and land package it’s very easy to get caught up in emotions. While a home on a steep block may have a stunning view, it could be a nightmare to build due to retaining or excavation costs. Be sure you weigh up the pros and cons.
 
5. Be informed
 
This is so important when looking to buy or build an investment property. There are many tools that are available to you to help you make an informed decision. Knowing the market can be key to making the right investment choice. Explore realestate.com.au for some valuable insights and see what houses are selling for in your chosen areas. Speak to local real estate agents to gauge what rentals are being achieved in the areas you are considering. Being informed also means being wary of get rick quick schemes and property peddlers. If someone is promising you guaranteed returns and overnight riches, walk away; the only person getting rich is them. There’s no such thing as a property psychic and while there are tried and true methods to research, no one can make guarantees. Understanding your tolerance for risk will help you shape how much you’re willing to take on over the shorter and longer term.
 
6. The importance of selecting the right block of land
 
House costs can be controlled. Its easy to reduce or increase the size of a house to help meet a budget. A piece of land is a different story. There is a general rule to keep in mind when selecting your house and land package. To avoid additional site costs, try and avoid heavily sloping blocks. The flatter the block, the cheaper the site costs. If land slopes or has too much of a fall, you run the risk of extra costs, such as retaining walls.

7. Recap your plan
 
Your plan should facilitate your goals of growing your portfolio to a point where it’s producing the growth or income you’re aiming for. It should serve as a structure for you to stay in the game.
 
Here’s an example of a purchase plan you can follow:

• Define your strategy
• Set up your criteria
• Do your research
• Source your builder and look at house and land options
• Get appraisal
• Do your due diligence