What’s holding you back?

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It’s nearly the end of the year and like me, you’re probably wondering where it’s gone! I was going to do so many things this year, but somehow life got in the way.

There’s always a reason not to do something, particularly if it requires a bit more thought and attention, and many a good idea is probably sitting on the back shelf waiting to be actioned.

But buying an investment property shouldn’t be one of them. According to domain.com.au, in 2013, some 4.5 million people were living in private rental accommodation – about 1.8 million households, or 23.4 per cent of households – and projections suggest this figure will grow. From our point of view, our figures are definitely indicating an increase in the rental property market.

So what’s holding you back? Money? Worried about tenants? Here are a few points to consider when you’re finding a reason not to buy an investment property.

Have I got enough money?

This is always top of the list for many people who are looking at buying an investment property, but the reality is, with expert advice, you can probably work something out. Although you may think you haven’t enough equity in your own home, or you may think you your deposit is too small, talk to a financial specialist who can do some number crunching for you – you’ll be surprised with what they come up with.

Am I buying the right property?

Whether you’re buying for investment, or for a home, just about everyone will have a bit of self-doubt at some point and wonder if there is a better property about to come on the market. However, the key to buying an investment property is to view the property as a business and with any business, do your homework. Speak to a property specialist or knowledgeable friend or colleague who will tell you what to look for and what to consider. For instance can you rent the property immediately, or does it need some maintenance, meaning you’ll need to budget for an empty property while the work is being carried out? Once you’ve done your research, viewed some properties and had an offer accepted, don’t look back!

What if I get bad tenants?

We all hear about the horror stories of bad tenants in the media and internet, but we don’t hear about the majority of tenants who pay their rent on time, look after and generally treat their rental property as their home. Whilst you can find your own tenants, a good property manager will use many screening tools, such as employment verification, contacting previous landlords, credit checks and using a tenant database to ensure you get a good, reliable tenant. Plus they will continue to communicate with the tenant, make regular inspections and update you with reports, giving you peace of mind your property is being properly cared for.

What if my financial situation changes?

Unfortunately in today’s economic climate, there are a lot of uncertainties, however you can plan for the worst case scenario by reducing your risk. Some banks and financial institutions are still offering interest only loans on investment properties and this may help keep payments manageable. The golden rule here is don’t stretch yourself; many people work on a conservative loan to valuation ratio of a maximum of 80 per cent. There is always a property that will come on the market that will at least break even, or give you an income so you are not out of pocket. This will mean that if your financial situation changes, such as a reduction in hours or a job loss, your investment property is taking care of itself financially and you’re not stressing about additional payments.

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