First Few Steps of Real Estate
The sheer resilience of real estate means that the ‘brick and mortar’ is never quite off the investment cards. In fact, for us Australians, it is more like the panacea of the present day. We know that the market has caught good momentum and it is only going to take off for greater glories without any threat of boom (and subsequent bust) at hand. So if you are looking to create a portfolio for yourself or invest as an owner-occupier, all you need to do is to conduct your homework diligently before embarking on the property market journey- rest will fall in place.
Evaluate your budget
Before you go in with the motion it is important to prefigure just what your budget is. If it is going to be your first home, do you have a First Home Saver (savings account) cushion to aid you? What mortgage rates are you looking at? What upfront cost are you ready to fork out? Are you planning on a Mortgage Insurance to curb the upfront fee?
What kind of cost you may incur
If you are buying to renovate as may the case be with fixer-uppers or to just rent out. If renovation is on the cards, you need to assess whether they will be cosmetic or structural in nature. In both cases, the cost may vary. For example, when you make a structural change, you need to vacate the premises and factor in the rent you pay for alternate premises into the renovation expense. The same may not be the case if you have a cosmetic addition like the swimming pool in mind.
What’s your aim
Find out what your exact aim is? Be willing to discuss it with experienced people. It will help you chalk out near-perfect strategies. If you are buying a home only to rent it out and earn through rental growth (concept of negative gearing added in for good measure) then you should find all about the rental yield of the neighbourhood. Alternately, learn everything about the capital growth if you intend to build a portfolio for yourself.
Is your property location supported by multiple industries
Research on the location you want to buy in. Is the area supported by multiple industries? This question cannot be overstressed. I have seen the mining bust taking the sheen away from associated real estate properties simply because areas proliferating due to the mining boom did not have the support of other industries. Choose areas which exhibit diverse factors of growth and do not certainly go for those which piggyback on one particular industry.
Other points worth noting
There are many other aspects which an aspiring investor should give more than a cursory glance to. What are the comparable sales figures for the area, what is the history of growth, how does the area measure in terms of town planning initiatives, among other things. If your intent is right and research is strong half your battle is won before you take the field.
How did you walk the first few steps of the real estate world?