What makes one investor better than another? Here are 10 tried and true steps successful investors use to help steer their decisions and to help them get the most out of their investment.

Do Your Homework

Nothing makes for a better investment foundation than solid research and a sound understanding of the property market. Start reading property investing blogs, scour investing websites as they are often packed with useful information, attend investing seminars or download and listen to investing podcasts.

Talk to your accountant

You need to understand the tax implications of buying an investment property and your accountant is the best person to talk to about this. Ask them to clarify the following:

Negative gearing implications and depreciation allowances on new buildings. They will be able to advise if you are better off buying in a new or old building

If you are buying a property with someone else ask whose name should be on the contract as this may have impacts on any future tax benefits, land tax and stamp duty.

How much they believe you can afford to spend each week on an investment mortgage and the tax impact on this amount.

Review local market data

There are many resources you can tap into to access market data for different regions across Australia. Sources such as CoreLogic RP Data, APM Price Finder, realestate.com.au or Residex will help you understand different property markets across each state and territory. Additionally, most government websites provide community profiles that share information about council plans, development projects or building regulations that can help you understand the supply and demand of the area as well as offering data to refine your search.

From a local perspective, your local LJ Hooker office can provide you with an in-depth local market report detailing the strongest growth areas, most traded and fastest selling areas, the top performing local suburbs and a snapshot of houses and unit sales, median sale price, rental yield, days on market and more. Understanding the local market is very important so make sure you contact your local LJ Hooker office – they live and breathe real estate and are a great source of valuable local market data.

Get a Loan Pre-Approval

This is an important step to ensure you are prepared to buy the right property as soon as it becomes available. A pre-approved home loan is a green light for buying. It gives you a realistic idea of your borrowing capacity and ensures you have a price range ceiling. Without pre-approval you can’t confidently put a bid in at auction or make an offer on a property without the panic of a last minute rush.

Get a feel for the neighbourhoodWhen it comes to becoming a seasoned investor nothing can boost your proficiency more than experience and one hands-on way you can get this is by visiting as many properties as you can before placing any cash on the table. This way you’ll be more likely to spot a bargain – and a rip off.

If you’re looking a buying an investment locally, it’s a good idea to wander the street in the area you are looking at buying in and see if anyone is out cleaning the car or watering the garden. Ask them what the area is like, how long they have lived there, what they like about the neighbourhood and what they don’t. What is the noise like during the day and night and any other questions you may have? You may even be able to find out why the seller is moving and if there are any developments that might impact the value of properties in the immediate area. Or if that seems a bit scary visit the nearest café and ask them what the area is like – they are often a great source of local gossip and community knowledge.

Be clear about the type of your property you want

Decide whether you want to invest in an apartment or a house. There are pros and cons for both options and these may vary depending on the area. You also need to consider if you want to buy a new or old property.

If you are buying a new property off the plan, you are able to lock in today’s price for a property that may not be completed for another year or two. What’s more, until the property is complete you won’t have to make any mortgage repayments – the only commitment is a deposit. The downside is there is no guarantee the value of the property will rise between purchase and completion.

The other option is to buy an existing property. One of the key benefits of this option is that you may have more scope to negotiate on price in a slower market. Plus, there’s often the capacity to add value to older properties by making your own improvements, which in turn may also increase the rental it attracts.

Location Location Location

A golden rule for a solid investment is to choose a property close to amenities: transport, supermarkets, schools and hospitals – the more nearby the property is to facilities, the better. Also consider the crime rate, walkability scores, any future amenities planned or the historic charm of the property or the area.

Think about your ideal tenants
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Carefully consider the type of tenant you want to attract before deciding what and where to buy. For example, if you’re looking to attract executive tenants a property in an urban location near transport, cafes, business and commercial premises is highly likely to be appealing to them.

If you want to attract a family, consider looking for properties that have an outdoor space; a deck or garden. Look for a place with extra space for the kids to play, one close to good schools, parks, transport, hospitals and shops.

Keep Some Cash on Hand

Successful investors keep a slush fund to ensure they are able to cover unexpected costs such as maintenance, rental voids and contingency for interest rate increases. Some experts suggest saving 9-10% of the gross rent in a slush fund to ensure you are prepared for the unexpected.

Due diligence

While you may be tempted to snap up a bargain quickly, make sure you do your due diligence on the property and ensure you don’t sign anything including offers, sales contracts or any other piece of paper thrown at you unless your solicitor or conveyancer has reviewed and approved them. Remember don’t get too emotional about these purchases as you are buying for return you’re not buying a home.

Making Informed Decisions

Have you been like a cat at a fish bowl, looking into the Australian property markets only to find yourself unable to make that final commitment? To help you we have spoken to some of our property management experts who lives and breathes property and asked them to share what they believe makes a good investment.

Where You Buy

Location is obviously the most important, and that can be narrowed down as much as a street, or even an aspect of the street that can make a significant difference to the potential growth of a property’s performance,” our agents said.

They assert that if you are looking for an area to invest in, a good rule to stick by is to ensure that it is within a 10-kilometre radius of a major city hub – an even smaller distance for smaller cities like Adelaide or Perth.

“Also, it’s sometimes a good idea to start your investment portfolio in an area that you live in, because you’ll know that market more than anyone else does,” they said.

What You Buy

Our Property Managers stress the importance of not only focusing on the quality of the property you purchase, but also the size.

They have seen owners in the past caught out that way. They’ve gone and paid a price for a three-bedroom terrace, say in an area like Surry Hills, and it ends up becoming a two-bedroom rental because of the size of that third bedroom,” they said.

If you’re a first-time investor and can’t decide between purchasing a house or a unit, it is recommend you discuss your objectives with your local LJ Hooker real estate agent and their experienced Property Management team as they will have a good perspective as to the rental capability of the property.

“Buy into an apartment building that is fairly modern – nothing too old where there could be a special levy raised as suddenly the building needs repainting because it’s 30 years old or the fire alarms need to be upgraded, for example,” they said.

When You Buy

Our agents believe there is never a bad time to buy property, you just may have to look in different areas depending on what the market is doing. Residents of Florida should Sell my house in Florida.

“The property market is only as abundant as the people pushing it. As soon as they step back, it is often an opportunity when you should jump in on investment property,” they said.

A proper understanding of the market is crucial. Going to open homes and viewing auctions to paint a clear picture of the market. If they’re all going crazy then that’s an indicator that it’s time to take a step back and wait for things to settle down.

Any Other Tips?

As some final pieces of advice, our agents said to not expect quick profits from property, be patient, take your family and friends’ critique with a grain of salt and ensure that you “engage a skilled and qualified property manager that has a good reputation, because that could make or break the investment”.