Sunday, 16 March 2008

Important Factors To Consider Before Buying Your First Property

Source: Property Direct News

It is important that you consider the following factors when buying your first investment property.

1. Spend time researching all aspects of the property market before even looking for an investment property. Factors, such as negative or positive gearing, rental returns and depreciation are key matters that have to be considered by a first time property investor.

2. Past trends in property values generally are an indication of future trends and therefore it is wise to examine the long-term capital growth rates of the suburbs. There are real estate websites that you can use for free to get a feel for recent property values in various locations.

3. Take a broad approach to buying an investment property. Most first time investors buy a property in their local neighbourhood because they are familiar with the area. By taking a narrow approach to the location of the investment property, you limit your options.

4. Try to get suburbs in lower priced areas which have a higher number of properties for sale. A simple tip is to do a search online for the number of listing in a particular area. Perhaps cast the net a little wider to include surrounding suburbs, as they are generally the next 'go-ahead' places.

5. Don't allow your emotions to select a suburb. Most first time property investors buy a property they would like to live in - thinking with their heart. It is important to remember that the investment property must appeal to a tenant who will be paying the rent - thinking with your head.

6. Check out any planning changes proposed for the area. Many local councils are undertaking reviews of zoning which could have a major impact on property values. The planning department of a local government can advise you of any proposed zoning changes.

7. Check out any planned infrastructure changes for an area you are interested in. For example, an upgrade of the local shopping centre, a construction of a new highway or train station can have a major impact on property values. With industrial development in particular locations comes a shift in where people want to work and live. It adds to the complete lifestyle focus. No longer do locals need to travel in to town and developers are seeing this demand and are committing to the expansion of amenity for local communities.

8. Make sure that there are tenants prepared to rent your property. Rental income is a key factor in servicing the loan so if you cannot find a tenant then you will have problems keeping the investment property over the longer term.

9. Check your finances before you consider buying an investment property. If you have pre-approved finance it will allow you to move more quickly to secure the right investment property.

Related Article: Homework Is A Vital Step Before Buying Your First Property