1. Be realistic about your investment goals
What is it that you are trying to achieve?
Are you looking to buy property for growth, and then sell? Or are you wishing to invest in property for the long term? Your investment goals determine the type of property you buy, so it is important that you are clear about this from the start. Although a home on a steep block may have a stunning view, it could be very costly to renovate due to retaining or excavation costs

2. Establish your budget
Before investing in property it’s extremely crucial that you have a thorough understanding of your cash flow. Always arrange for a pre-approval from your bank, so you know how much you’re able to borrow before you start hunting for properties. Do not ever go beyond what you can afford – you will pay the price financially and emotionally later on.

3. Do not forget the ongoing costs
Make sure you allow enough cashflow for rates, insurance and general repairs. And when you have purchased your ideal investment property do what you can to prevent costly maintenance issues arising, such as replace ageing taps.

4. Buy in a growth area
Try to choose an investment property in an area where there is strong demand for rental accommodation. Properties close to transport, shops, universities and schools are always more attractive to tenants. It is important to do your research!

5. DIY?
Paying tradesmen to renovate your investment property is a very costly exercise. If you have budgeted and allowed for it, then that is fine. Beware of costs exceeding the quoted amount due to hiccups that sometimes do popup for whatever reason. If you’re prepared to get your hands dirty you can save money and increase your profit margin by doing the work yourself. Make sure you are good with your hands and know what you are doing before you take on the work – don’t allow your investment property to be your guinea pig!

6. Avoid luxury or lavish properties
Remember a rental property only has to be clean and functional. Don’t get sucked into buying a property simply because it has a stylish interior. If you do have plans on living in it in the future, then by all means, plan your property purchase accordingly.

7. Think carefully before negative gearing
One of the most misunderstood concept when it comes to property, investing and taxes. Most accountants recommend to purchase a property that is negative geared, to reduce the taxes that you pay. Great advice, but what about when you are short on your repayments? If your repayments on the investment loan won’t be fully covered by the rent, your property will be negatively geared. While this can have tax advantages, it can also lead to financial stress if you don’t have enough cash flow to cover the loan repayments, rates or body corporate fees, so consider your budget carefully before buying. Ask your accountant about being able to access your potential tax refund earlier also – if they look confused, chances are you have the wrong accountant looking after your property affairs. You need to get your property expert accountant involved in the planning process. It helps to avoid any issues down the track.

8. Don’t skimp on a building and pest inspection
Before signing a purchase contract, take the time to understand the building report to avoid expensive repairs down the track. Termites are one potential problem to watch out for. We have seen many clients who have relied on the inspection reports provided by the vendor. This is a bad idea, as the report will most likely be favourable to the vendor and will not disclose the true nature of the issues at hand.