Don't Buy An Investment Property Without Knowing These 4 Things First

The right time to buy an investment property is based on four key things. One is cash flow, knowing that you've got enough cash flow coming in to not only meet your current living expenses but the new commitment that you're about to embark on being the investment property and the loan that goes with it. The second key item is making sure your home loan is under control.

You do not want to buy an investment property if you're just managing to pay down your home loan. You want plenty of equity within your home. You want to be on track to pay that off on time if not earlier before you then go off and want to buy an investment property and the associated debt and expenses that go with it.

The third key thing is return. Knowing what you're buying in terms of the return in income and also growth. Being an investor you usually want it all. You usually want the good return being the good good rental and you also want the good growth being capital gain but often one will compromise the other.

So knowing what you actually want to achieve whether it be cash flow neutral or long-term capital growth. The fourth key point and when to buy an investment property is know the time frame.

If you only want to buy a property for the short term then buying an investment property is not the right thing for you. Normally investment properties are medium to long and medium being four to five years long is being five to ten to fifteen years. You can buy an investment property without savings however you will need equity.

So if you've paid down your home loan or another investment property and you want to buy an investment property additional investment property that's okay because then you can use the equity within your current home or other properties. Again like when you buy your first home you'll need at least 20% deposit in this case not having the savings you need at least 20% equity.

Where to buy investment property?

Where to buy investment property is probably the number one question I get from my clients who's looking to buy an investment property. Where to buy is about your research. 

People tend to go wrong when they buy outside their comfort zone or in their knowledge bank. So if you live in an area and have been all your life, then the logical thing is to look at that area because you know the good streets, you know where the schools are, you know what to do in terms of for fun or go in restaurants or whatever. And that's what your tenant's gonna look for. 

If you don't wanna buy where the areas that you already know, then the answer is pretty simple, research. 

Get to know different areas. And how do you do that? Well, saturate yourself in information. Look at RP data, look at realestate.com, speak to agents in different areas.