Beginner Investing Guide - How to Buy Your First Investment propertyThis beginner investing guide will take you step by step on how you should buy your first investment property. You must start with residential investment property because it is less risky and easy to understand. Beginner investing can be confusing because there are so many questions that flood your mind. Should you first buy an investment property or a house to live in? Which is the best neighborhood to buy an investment property? How to get your finance organized? Should you buy an old house and renovate? Should you buy a new house and rent out? Or should you buy an 'off plan' from a developer or buy land and build a house on it by yourself? There are so many options but we will first concentrate our attention on options and strategies that will fast track your property portfolio. This beginner investing guide will get you started with the basics. We will cover the following topics in different related articles: •Importance of a Sound Real Estate Investment Business Plan • Pre Approved Loan - The First Giant Step • How to Buy Investment Property? • Tips for Purchasing Investment Property at an Auction or Sale by Private Treaty • Costs to Consider when Investing in Rental Property •Learn The Basics of Rental Cash Flow • How to Buy Property Below Market value • How to Utilize the Settlement Period for Profit? • Renovation Tips •How the Landlord Tenant Act Effects Property Investors • How to Rent Your Property • Repeat the Process - Revalue, Refinance & Buy You must read the related articles on beginner investing mentioned above before you get started. Area to Buy Your first step involves buying an existing property in an area you understand (in your neighborhood) at or below market value. Buying below value will require some education and experience. But this should not deter you because you have to start somewhere. So this is the right time to start. The property should be close to the area you live in. There is no point in buying properties that are 6 to 7 hours drive away. You will waste your energy in commuting rather than renovating your property and increasing its value. If you look around you will find great investment opportunities in your neighborhood. An investment property is seen with the mind and not so much with the eyes. The numbers have to stack up. An uneducated mind will pass a great investment property without realizing its value. Once you understand property you will start spotting them when you go out for your daily walk. Buying and Renovating Buy a property that is structurally sound but in need of minor cosmetic repairs. You will be amazed how much value you can add to a property by doing some simple and inexpensive cosmetic changes. These can involve trimming the over grown garden, mowing the lawn, replace some light fittings, polishing the floorboards or changing the carpets, painting the walls or by simply removing the rubbish you can increase the value of the property by thousands of dollars. Renting The basic principle of investing is that your tenants must pay your mortgage. You have to get your numbers right when buying an investment property. Your rent must cover not only your mortgage but also the out goings such as rates, body corporate, insurance and maintenance. In some high capital growth areas rents may not cover the expenses. In such cases you will need to cover the short fall from your salary or cash flow from business. You must check the rents and vacancy rates in the area before buying a property. The property must be in an area close to schools, markets, communication centers, job centers, where there is large demand by tenants. There is no point in buying a property showing a very high return on investment but in an isolated area that is difficult to rent. Repeat the Process The quickest process to grow your portfolio quickly is to learn the art of buying property below value. Then add value to the property by carrying out cosmetic renovations. For every dollar you spend on the property the value must go up by atleast five times. You must then get your property revalued. The extra equity that you create can be used as deposit for your next purchase. The faster you repeat this process the faster will your net worth grow. This is called the 'Deposit Recycling Time'. Do not get into projects that will take very long time to complete or are risky in nature. Do not get lured by huge profits. Keep it simple and quick. Cash Flow A word of caution. You must also keep a tab on your cash flow. Most investors do not comprehend the importance of cash flow and get into trouble. Most mortgagee sales and foreclosure take place because people under estimate the importance of cash flow. When starting out buy only cash flow positive properties. Do not buy negatively geared properties (that take money out of your pocket). Banks will lend you if you have cash flow and equity. You will need to balance both these aspects if you are to become a successful property investor. Beginner Investing can be simple if you follow the basics and take some time and effort to educate yourself.
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