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The First Timer’s Guide to Purchasing an Investment Property

February 15, 2014 | Leave a Comment

investment propertyBuyers purchase an investment property for many reasons; to get a foothold in the property market, to build a financially secure nest egg for retirement or to build a property portfolio. Every property investor has to start somewhere, so your first investment property purchase should be researched thoroughly, as not all purchases will deliver positive returns.

 

Select the Right Property, in the Right Area, at the Right Price

Always choose a property that will increase in capital growth. Purchase in an area you are familiar with and as a first timer, do not consider offshore or interstate properties. Always get an independent valuation and research the current market value of properties in your chosen area. Select an area where there is a demand for rentals to ensure you have a steady flow of rental income. Also check out the demographic of the area as to whether there is greater demand for family homes or apartments to rent.

 

Select the Right Mortgage

When sourcing finance for an investment property, you will be faced with many options. Your loan will need to be structured correctly, so get expert advice from your financial advisor or mortgage lender. For taxation purposes, it is probably better to keep your current home loan and your investment loan separate. It is also highly recommended that you use an ltv, also known as a Loan-To-Value calculator to help you work out the ratio between a loan amount and the value of the property being purchased with the loan.

 

Hire a Good Property Manager

A good real estate agent will look after your needs and screen suitable tenants on your behalf. They will do inspections several times a year which you can also attend if you are able to. Your property manager can provide you with a wealth of information on the landlords and tenant’s rights and responsibilities. It will be their responsibility to take care of the general maintenance, hire companies like these commercial carpet cleaning services in Des Moines, IA and any emergency situations that might arise. They can also attend court proceedings in the event of non-payment of rent. It is a good idea to build a good rapport with your property manager and keep in regular contact.

 

Make Sure Your Property is Ready

If your investment property needs sprucing up, just give it a coat of neutral paint. Make sure your property looks tidy and fresh, as a well-presented property will have no trouble attracting quality tenants. If you’re struggling for funds to get the property renovated, you can look into getting preferred equity financing for property developers for an extra injection of cash to see you through the final stretch. In addition, you will need to ensure that your property is in a livable condition. No tenant wants to move into a new home only to find that there is a mold or pest problem. Preventative maintenance is crucial, and connecting with an experienced pest control company like https://www.pestcontrolexperts.com/aptive/florida/ for example, is advised to keep your property in top condition.

 

Negative Gearing

There are many things to take into account with property investing. Your accountant will be able to give you advice on capital gains tax, stamp duty and interest deductions. If you make a loss on your investment property, this can be used to offset or reduce tax paid on other income you earn.

Purchasing an investment property is an exciting time and can help you reach your ideal financial goal. Investment properties are a longer term type of investment. Do not place yourself into financial hardship just for the sake of buying a rental property. This could put you in the position of having to offload and sell the property at the wrong time. Choosing the right home loan at the outset will put you on a stable financial path. A Clear Path Variable Rate Home Loan from BOQ can be used to purchase an investment property and gives you flexible repayment options.

Do you have any tips from experience when it comes to purchasing an investment property?

Brian
Brian

Brian is the founder of Kids Ain’t Cheap and is now sharing his journey through parenthood.

 
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Filed Under: Money and Finances Tagged With: first time investor, investment property, property, real estate

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Basic Principles Of Good Parenting

Here some basic principles for good parenting:

  1. What You Do Matters: Your kids are watching you. So, be purposeful about what you want to accomplish.
  2. You Can’t be Too Loving: Don’t replace love with material possessions, lowered expectations or leniency.
  3. Be Involved Your Kids Life: Arrange your priorities to focus on what your kid’s needs. Be there mentally and physically.
  4. Adapt Your Parenting: Children grow quickly, so keep pace with your child’s development.
  5. Establish and Set Rules: The rules you set for children will establish the rules they set for themselves later.  Avoid harsh discipline and be consistent.
  6. Explain Your Decisions: What is obvious to you may not be evident to your child. They don’t have the experience you do.
  7. Be Respectful To Your Child: How you treat your child is how they will treat others.  Be polite, respectful and make an effort to pay attention.
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