31 March 2016 Important steps to property investment Buying a property to rent out is an way for Australians to invest. Compared to other types of financial instruments, which might require complex knowledge or ongoing professional advice to invest, residential property is a relatively straightforward asset to manage. That said, how effectively you manage an investment property will determine whether or not the strategy helps you reach your financial goals. Here are the important things for you to consider when investing in property. 1. Develop an investment plan Understand your reasons for investing: Set yourself achievable goals. Clarify what your motivations are for investing in property, so that you never lose sight of your investment goals. An accountant or financial planner may be able to assist you with this process. 2. Obtain a loan pre approval It’s helpful to understand your potential borrowing capacity before you start to look for a property. This will help you keep within your mortgage affordability range. 3. Do your research Obtaining accurate and credible information from reliable, recognised sources can help in determining the most appropriate market and property to invest in. 4. Location, location, location Choosing the right location will give you better potential for price growth over time. This is normally a result of local supply and demand, so do your research on past sales. Check vacancy rate trends, and check with local councils for proposed changes in the suburb, town or region, as these can be pointers to potential growth areas. 5. Appoint a licensed conveyancer or solicitor Legal professionals can provide crucial resources and insight so get their advice early on any potential purchase. Depending on their experience, they can often point out pitfalls and things to watch out for, as well as opportunities you hadn’t thought of. 6. Select your property and make an offer Look for a property that has strong local tenancy demand and owner occupier appeal. That way – if and when you come to sell – you’ll have a property that is attractive for investors and owner occupiers. If possible, sign the contract “subject to finance and Inspections”. Obtain a pest and building report (if not new) and ensure that you have full finance approval. 7. Get full finance approval It’s important that you get full finance approval so you can confidently sign contracts with the knowledge that you have the funds to settle the property. If bidding at an auction it’s essential that you have appropriate finance approval before the auction, as a successful auction bid is binding. 8. Organise your insurances Any insurances you decide to take - landlord, building and contents, and personal income protection should be in place prior to settlement. 9. Settle your property Your conveyancer or solicitor will handle the entire settlement process. Once the property is settled, you will start making mortgage repayments. 10. What about a property manager? Appointing an experienced and professional property manager is key to the success of your investment, this can be done by the appointment of a registered real estate office. 11. Obtain a quantity survey (QS) report A QS is a depreciation schedule, outlining the tax deductible investment property building, fittings, fixtures and construction cost items. Ask your financial adviser or accountant about how to get the best out of your depreciation schedule. 12. Ready to invest? Once you have a reasonable grasp of these points, the rest of the process should fall into place reasonably easily for you. RAMS home loan specialists are well equipped to help you with any property investment finance-related questions you may have, as you prepare your foundation for taking your first step into property investment. For further information, make an appointment today. Note: These 12 steps to property investment are intended as a guide only, and your individual circumstances should naturally be taken into consideration. This is why we also recommend you obtain independent professional advice relevant to your financial circumstances.