5 questions every property investor should ask

Investing in real estate can be rewarding and it’s also work. It’s never really a set and forget. In fact, most rewarding property investments are a direct result of the work put into them.

Regardless if it’s a renovation project, something to rent now and live in later, or purely from an investment point of view, here are five essential questions that every property investor should ask before diving into the market:

1. What Are My Investment Goals?

Begin by defining your investment goals. Are you looking for long-term rental income, quick capital appreciation, or a mix of both? Clarifying your objectives will help you tailor your investment strategy and property selection to align with your goals.

2. What Is the Location's Potential?

How’s the local economy and industry? Location plays a pivotal role in real estate investment success. Research the area's growth prospects, proximity to amenities, schools, public transport, and crime rates. A promising location can contribute significantly to property value appreciation and rental demand. Also consider long term - is there a potential over supply in the future that may bring down property values (green fields being subdivided - check with council).

3. What Is the Property's History?

Dig into the property's history. Has it been on the market before? Are there any legal disputes or structural issues? Investigate the property's sales history, any renovations or repairs done, and any potential red flags that might affect your investment.

4. What Are the Total Costs?

Beyond the purchase price, consider all associated costs. Calculate property taxes, maintenance expenses, strata fees, and potential renovation costs. Understanding the full financial picture ensures you're making a realistic assessment of the investment's profitability. Don’t forget moving-in costs, particularly if you’re a first home buyer and need white goods, furniture etc.

5. How Will I Finance the Investment?

Determine your financing options early on. Will you use your savings, take out a mortgage, or partner with other investors? Evaluate the interest rates, loan terms, and down payment requirements to choose the financing option that aligns with your financial capabilities.

Property investment is a long term strategy and should be considered in the context of your life goals. Reach out and surround yourself with industry experts (rather than family and friends), and make strong informed decisions.