Investing in Property: Your Checklist

There are several reasons to consider investing in property, including the potential to generate passive income and build wealth over time. It can be a great long-term strategy, however, it’s not a decision that should be made lightly. If you’re looking at investing in property, we recommend considering these points to help maximise your return on investment.

1. Consider the costs and risks of investing in property

When it comes to investing in property, you’re in it for the long haul, so it’s integral to make sure you have a strong budget in place, and that future considerations and personal obligations are accounted for.

Ask yourself – is my income secure? Does it have room for growth? Are my circumstances and responsibilities stable?
Mortgage repayments, maintenance costs and personal expenses can all play a part, and you need to make sure you can satisfy lender requirements as well as comfortably make loan repayments.

It’s also important to consider potential risks associated with the investment, such as fluctuations in property values and interest rates, as well as the possibility of high tenant turnover and legislative changes that might impact rental properties.

2. Consult a professional

There’s absolutely no reason to do it alone. When it comes to investing in property, seeking expert advice isn’t an option, it’s a necessity. Consider chatting with a…

• Financial Planner to ensure that property investment is the right choice for you. A financial planner will likely assess your financial circumstances and take into account your potential rental yield, potential for capital growth and how effective the investment will be from a taxation standpoint.
• Mortgage Broker (that’s us) to help secure an investment loan. Your local MoneyQuest mortgage broker can guide you through the lending process and answer any questions you have. All our finance specialists are heavily regulated, so you can rest assured that you’re receiving compliant and effective support.
• Buyers Agent who can help you to find an appropriate property for your financial situation. You can search for a property without assistance, but a buyers agent can help you focus on suitable properties based on your budget, preferences and investment goals. They can also bid on your behalf at auction and negotiate the purchase price and terms.

3. Get your supporting documents ready

When purchasing an investment property, you’ll need supporting documentation to prove you’re viable for a loan. These might include…

• Proof of income, usually in the form of recent payslips. If you are self-employed and don’t receive payslips, some lenders accept self-certified income declarations supported by an accountant’s declaration or your two most recent business activity statements.
• Proof of employment such as a signed formal offer, or a personal reference from an employer.
• Proof of existing assets e.g. car ownership or a residential home that you own.

You also must inform lenders of any existing debts and liabilities, and disclose:

• Rental repayments or mortgage repayments.
• Your tenancy statement if you’re renting. This proves you can make regular repayments.
• Any credit card or student debts. However, if you can, aim to pay these off before applying for your loan, as this will likely boost your chances of approval and make you appear “less risky” to lenders.
• Buy now pay later debts such as ’Afterpay’. However, as above, the same rule applies – try and clear these debts before applying for your investment loan.

It’s also worth seeking pre-approval from your chosen lender, as this will give you a sense of which properties you likely can and can’t afford. It can also give you a leg up on the competition at auction and allow you to bid with confidence.

 Have the knowledge and confidence to follow through on investing in property

We completely understand that an investment of this scale is a massive commitment, believe us. However, an investment property should ideally be purchased based on rational considerations rather than emotions. Remember, you’ll likely be managing and facilitating maintenance, repairs, and amenities for the property and putting effort and money into finding suitable tenants and managing rent payments.

Once you’ve confirmed this is the right decision for you and have put together your finance team, collated your documents, secured pre-approval, and found a place that meets your needs, all that’s left to do is take action. While this can be scary, just remind yourself that you’ve done your due diligence, you’ve engaged assistance from professionals and have made sure that it’s the right decision for you.

If you need guidance or reassurance regarding a property investment loan, feel free to reach out to your local MoneyQuest mortgage broker. Once you’re in the market, your broker will still act as a vital support system, making sure you’re on the right loan term and rate for your needs, and ensuring the loan experience is as smooth and positive as possible.

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