In Australia, like in most large real estate markets, no two years are the same because of the fluctuations in the market. The total number of homes under construction and the ones that are newly built, old homes up for demolishing, and foreign investors with pockets full of cash are just some of the factors that confuse newbies to the real estate scene. However, with the help of the following 6 real estate investing tips, you won’t even feel that you’re a beginner in a game that is annually worth billions of dollars.
Dealing with the burden of personal debt before making a purchase
We have witnessed a student loans’ debt crisis in the States the recent decades but the situation is not much better in other Western countries. In fact, student loans are just one type of loan that could come in the way of investing in property. At some stage of the purchase, you might require an extra thousand or ten thousand dollars that the banks will deny you because of outstanding personal debt.
Seasoned investors are already aware of this snare, as they keep a clean credit score so they can get out a loan at any time. Beginners, on the other hand, have to deal with their personal debt before they are ready to enter the real estate market as investors. The last thing you want is to be unable to make the payments for any of the outstanding loans.
Give high-interest rates a wide berth
Although the general tendency in 2020 is for the interest rates to go down, some financial institutions might decide to raise them. You need to remember that interest rates on investment property have always been higher than conventional mortgage interest rates.
These rates are less susceptible to fluctuations in the financial and real estate market, respectively, as banks want a share of your effort to flip money through dealing with real estate. That’s why you should search wide and far in order to find the bank with the best balance between the interest rates and loan security. Otherwise, the unfavourable interest rates will eat into your profits.
Consider renting property
Apart from buying a new family home to live in for decades to come, you might wish to rent the property you have recently acquired. This way, not only will you get rid of the utility bills that relentlessly arrive at the doorstep of your new house or apartment but you can actually earn money from renting real estate. Australians who want to buy and subsequently rent houses and apartments usually look for specific rental properties in Brisbane and other major cities.
Are you prepared to be a landlord?
Although renting property is a great way to cash in on your investment, you should be prepared to assume the role of the landlord. Even if you are super lucky and find decent people for tenants, you are still going to have a few tricks up your sleeve (or literally inside your toolbox).
If they wish to avoid the handyman charging them for every minor repair, a modern landlord should be able to change water pipes, fix leaks, install light housings, and repair drywall. You don’t have to know to perform all these actions before you invest in rental property but you should have the readiness to learn on the go. Otherwise, renting property is definitely not your cup of tea.
Calculate your return per dollar
The best indicator if you did well in the real estate market is to figure out how much money you got back for every dollar you initially invested. From the very start of your investment, you will get bombarded with different figures, rates, and percentages do it might prove difficult to draw the bottom line. The “return per dollar” method is the most reliable one and it should ideally yield a 6% return in the first year of renting.
Buy the property as cheap as possible
Every merchant will tell you that buying cheap is the very basis of trade. The same principle applies to Australia’s real estate in 2020, although it is much more intricate to buy and sell a whole house or an apartment. However, when browsing properties, go for a piece of real estate that is going for a low price, even if they need extra remodeling or renovating. Our advice is to set a top figure of let’s say 150k dollars, that you won’t go over when purchasing your first property.
Now that you more about the Australian real estate market in 2020, you are ready to finally invest the money you have been saving for years. Stay true to the 6 tips listed here to maximize your profit margin.