The latest information released by the Australian Taxation Office (ATO) reveals a substantial rise in property investment activity among Australians. Currently, around 20% of taxpayers possess at least one investment property, with a significant 28.5% owning two or more properties. These statistics highlight the increasing popularity of property investment nationwide, indicating a significant surge in Australians entering the real estate sector.
You may be wondering how they’re doing it. A successful investment portfolio is the key. In this article, you’ll learn how to build an effective investment portfolio by determining these important things.
Things to Consider When Building Your Property Investment Portfolio. Here are the 5 Tips for Aspiring Property Investors.
Identify your property investment goals
In property investing, returns come from rental yield and capital growth. Experienced investors typically focus on one of these as their main strategy. While it’s ideal to achieve both, experienced property investors usually prioritise one over the other as an investment strategy.
Rental yield is the amount of money you receive through renting out your property. It is calculated by dividing the annual rent by the market value of the property. If you opt for a rental yield strategy, it is important to identify a property that performs well compared to others and different types of investments.
Obtained from the increase in your property’s value, capital growth requires you to be able to afford to keep the property until there’s a substantial rise in its value. With this, you need to aim for the right property in the right location at the right price which will allow you a rewarding capital growth over time.
Understand your borrowing capacity
Like any other new thing to you, it is essential to have a good knowledge and most especially, understanding of the things you’re getting into. Make sure you understand your borrowing capacity, rental income requirements, and the ongoing costs you’ll need for your budget.
This may sound overwhelming, but with the help of your broker, things get easier and lighter for you as you go along the process. Your broker will help you determine your borrowing capacity so you to understand your budget when it’s time to start searching for a property.
Determine strong growth areas
A strong and profitable investment portfolio requires thorough research and evaluation of potential areas for growth. This is another thing your broker will be helping you out for. Brokers may provide you with property reports so you can gain insights into the growth trends in your preferred investment location.
Decide what type of renters you want to appeal to
If you know what type of renters you want to attract and their demographics, then it might just be easier for you to make investment decisions in the future.
If you want to appeal to young professionals, then you may want to consider a smaller property, depending on their lifestyle and hobbies. Most young professionals are likely to be attracted to smaller dwellings, like townhouses and apartments near transportation links and CBDs.
If you want to appeal to families, you may want to opt for a larger property in the suburbs that’s near enough to schools, supermarkets, and recreation areas.
Get started today!
Your goals remain just goals until you start gravitating towards them by taking action now. So, get started today! Let’s talk and start journeying through your investment goals.
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