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Investing in real estate provides a plethora of benefits— if done properly. A successful investment property endeavour could mean extra cash flow, portfolio diversification, and more. But before you go on any investment ventures, you must make sure you’re adequately prepared.
If you're wondering if the time is right, check out the six signs you’re ready to invest in real estate:
Sign #1: You've built a good financial foundation
The first and most important sign that you’re ready for an investment property lies in your finances. Your financial foundation must be rock solid. If you don’t have a good handle on your personal finances, taking on an investment property will make things infinitely more difficult.
Investing in real estate requires a good bit of capital. In addition to the property purchase, you have to think about management expenses. If you have enough capital for at least a 20% downpayment and possible maintenance costs, then it’s a great sign that you’re financially ready to invest in real estate.
Sign #2: You know your investment goals
Investing in real estate shouldn’t be done on a whim. Property investment, like all investments, is a serious undertaking and requires a lot of forethought.
Setting clear and realistic investment goals shows that you’re ready to buy an investment property. It means you’ve carefully ruminated over your potential investment. And you know what it would take to achieve your goals.
Sign #3: You understand the risks
Although property investments are touted as less volatile compared to stocks and bonds, there’s still a level of risk involved. It's vital to know all the risks of owning an investment property well before you make moves to purchase one.
The most difficult aspect of real estate investment is how localised it is. For instance, similar properties can have vastly different values depending on their suburb. Every local market follows its own trends, which sometimes may contrast with what’s happening nationwide.
Knowing how to navigate through the risks will make purchasing your property easier. Plus, understanding the potential pitfalls involved may lead you to a better investment strategy.
Sign #4: You know your investment strategy
There’s a multitude of ways to invest in real estate. Common strategies include renting, positive gearing, negative gearing, buying and holding, and property flipping.
You know you’re ready to invest when you’ve decided on your investment strategy. You’ve thought hard about what you want to accomplish with your investment. And that you’ve considered your capabilities and limitations.
Sign #5: You have the time to manage your investment property
Real estate investments require a bit of hands-on work. With investment properties, you need to be present at every step of the home-buying process. And afterwards too, whether it’s for property management or renovation. To make the most out of your investment, you need to make time for it. If you can do that, then you’re ready to start investing in real estate.
Sign #6: You’ve found the right investment loan
You may have all the five signs above, but without a good investment loan, your property investment becomes that much more challenging. Your investment loan could determine the success of your investment property. You need to find one that matches your investment goals with preferable terms and good loan features.
It’s difficult to find the exact loan that can fit your specific financial situation. This is why we offer a range of investment property loans that cater to various investor needs. Once you’ve found the right investment loan, talk to our lending specialists and get started on your property investment.