Making the decision to jump head-first into property investment is not one that should be taken lightly. Here are a few questions that all potential investors should be able to answer before investing to improve their chances of long term property success.
- What do you want to achieve through property investment?
Having a clearly defined goal is one of the main factors to achieving success, not just in property investment but also in life. Are you looking to fund your retirement, to send your kids to university, or to create wealth? No matter what your reason is, remembering why you want to invest in property will be the one thing that will keep you motivated during the process, and will assist in ensuring your choices are the right ones!
- Do you fully understand the risks involved in property investment?
Investing in property can be a financially rewarding experience, and is an integral part of any Wealth Creation Strategy. As part of any strategy, it is important to understand the risks involved and how those risks can be minimised. This can be achieved by protecting your valuable asset/s through the appropriate insurance, for example landlord insurance, should unforeseen circumstances occur in the future. Setting up an ‘insurance plan’ for both yourself and your property allows you to fully benefit from the financial rewards of your investment property. It also provides peace of mind and a ‘safety net’ so that you are able to enjoy the rewards into the future.
- Have you got a finance strategy for your property investment?
While your bank may approve your request for finance, it is important to consider whether you can still support an investment property with your current financial commitments, and that it is structured appropriately for your lifestyle and financial goals. Create a cash budget to ensure that you will still have sufficient means to live while also supporting your investment property as investors who are unable to maintain their cash flow can face the possibility of being forced to sell.