Residential Property Investment Advice for Beginners

 When it comes to long-term investments for solid gains and returns, residential property has been a long-standing choice for investors everywhere. Many first-time investors often dive into the property market to select one as their investment. 

However, as profitable and lucrative as this may be, it is important to thoroughly understand the property market and do your due diligence before taking such a significant step. Therefore, this article will provide property investment advice to first-time buyers in Australia who want to make the most out of their investment. 

Understanding Residential Property Investment

Step 1 of property investment for beginners is to understand the term itself, “residential property investment”. The term is pretty much self-explanatory – a residential property investment is when a buyer or investor invests their money in a property (in this case, a residential property) and goes on to lease it for rent. 

Such properties could be just about anything, from condos and townhouses to apartments and studios. But, are there options when it comes to first-time investment property buyers? And what kind of residential property should you opt for as a beginner? Let us find out. 

8 Pieces of Property Investment Advice for Beginners

Before beginning your property hunt, consider the following property investment advice, as it will help you weigh all important factors carefully – leading to an informed decision. 

Here are 8 investment property tips for Australia’s buyers. 

Take Your Time to Understand the Market Before Making a Decision

One of the first property investment tips many beginner buyers receive is to conduct due diligence. This will save them a lot of time and effort. It is important to understand current market trends, future projections, and research factors such as:

• The kind of amenities available in areas you wish to buy property in 
• What kind of property you are looking for 
• Do the areas have price growth potential? 
• What are the average rental prices in the area? 
• Are there future development plans in the area that may increase property prices? 

Avoid Letting Emotions Guide Your Choices – Think Rationally

This is a rather underrated piece of property investment advice – but equally important as the rest. When buying a property as an investment and nothing else, ensure that your logic guides you, not emotions. 

Say you find a property that is highly appealing in terms of construction, aesthetics and interiors – it is likely to sway your decision. However, simply investing in a property for such reasons may impact the overall returns you make. 

Consider factors such as the property price, potential maintenance fees, the area it is in, the safety within the area, and more. Think like a renter who wants to rent a property. 

Start Small and Focus on Managing Risks

It is always advised that a first-time homebuyer’s investment property be small-scale so that they do not get overwhelmed and can manage their finances properly. Whether it is a studio, an apartment or a cosy villa or condo – a small property means a smaller investment and lesser risk. 

Once you begin small, you can learn from any mistakes or lessons and work your way up to diversify your property investment portfolio. Ensure to take into account different risks associated with your property investment, including:

• Vacancy risk
• Market risk 
• Structural risk 
• Cash flow 
• Capital risk 

Do the Numbers – Know Your Costs

This is property investment for beginners 101 – setting a budget well before time. 

Your budget will help you narrow down your property hunt – as you will not be looking for properties out of your budget. Ensure that your budget has ample space for upfront and hidden costs. 

Here is a breakdown of some costs associated with residential property investment: 

• Deposit (which usually costs 10%-20% of the purchase price) 
• Loan application fee (if applicable)
• Lender’s mortgage insurance (if applicable) 
• Government charges such as stamp duty, mortgage registration and transfer fees 
• Legal and conveyance costs 
• Building pest and strata inspection fees
• Maintenance fees 
• Repairs 
• Vacancy costs 
• Council rates 
• Water rates 
• Land tax 

Work with Experts – Don’t Navigate the Process Alone

As a beginner, navigating through the Australian real estate market may seem like a challenging task. This is why, most people work with exports – be it real estate agents, lawyers or investment experts who provide you with valuable investment property advice. 

Navigating the process alone may not only be overwhelming but may also cause some first-time buyers to miss out on important steps, which can cause compliance and legal issues. With experts to guide you each step of the way, your property investment journey will be smoother and hassle-free. 

Diversify – Avoid Putting All Your Investment into One Property

If you are confident in your property investment decisions, then the next best property investment advice would be to diversify your portfolio as much as possible.  

While market trends and experts provide valuable insights into your investor journey, you should always diversify your investment portfolio to not only avoid the risk of losing all your money in one investment but also maximise your gains and returns. 

Think Long-Term

A long-standing investment property tip for Australia’s buyers is to always think of the bigger picture, and always think long-term when investing. Even if you invest in a property and it doesn’t bear returns immediately, do not be disheartened. It is all a part of the long-term game. 

You must commit to maintaining your property to the best of your abilities to ensure that it eventually attracts tenants. As a landlord, you must be receptive to your tenant’s requirements and follow up on maintenance or repair requests. 

Another piece of investment property advice is to always remember that property is not a commodity that can be sold off immediately if you require funds. It is a long-term investment that will require your time, money and effort – but it will eventually bear fruit. 

Stay Informed – The Market Changes, and So Should Your Strategy

As a first-time property buyer, your eye should always be on the market and its trends. Like all property markets in the world, the Australian property market is also subject to peaks and troughs. 

If you see changing trends and feel it may not suit your investment, consider changing your investment strategies! You can consult experts for such matters too. 

Conclusion

Having understood the aforementioned property investment advice, you may feel more confident about taking the first step as an investor. Once again, while residential property investment is a game of patience and strategy, it is a relatively low-risk path to financial freedom. 
Facilitate your investment journey by partnering with InvestorKit. Our experienced team provides expert guidance, access to off-market deals, and strategic support throughout the entire investment process. Get in touch with us today for a free consultation and discover how we can help you achieve your property investment goals!