Okay you’ve had enough of working for “the man.” You’re finally convinced that buying an investment property is one of the best ways to achieve financial freedom. You want to build a property portfolio and are ready to start buying your first investment property. What hidden pitfalls do you need to avoid if you want to be successful?
Finding the right location
As the old saying goes, location, location, location. Research the market where you want to buy your investment property. Look for areas that show signs of growth and economic stability like infrastructure projects and commitments. Your investment decision should be made based on the potential for wealth generation using metrics such as historical growth patterns, as well as the unemployment and vacancy rates in the area.
There is nothing worse than picking a neighbourhood just because it’s trendy and your property value goes down leaving you with “negative equity” or owing more than the property is worth.
Pay only what the property is worth
Make sure you don’t pay more than the property is worth. Sometimes people get so emotionally caught up in a bidding war or in the excitement of purchasing their first investment property in Australia that they end up paying way more than they should have.
Consider all the costs
Do a realistic budget. It’s important as a property investor to ensure that your rental income covers all the monthly costs such as: mortgage, interest, property tax, as well as incidental charges like garbage pick-up, water usage, property management fees, etc., or you will have to pay out of pocket.
Also make sure you are prepared for any ‘worse-case scenarios’ like an increase in interest rates, repairs, maintenance or an unexpected vacancy.
Your first property is your first step to starting to build a property portfolio. However, you have to avoid certain pitfalls if you want to do it right.

If you need more advice on property investment in 2015, call NPIS – your trusted property partner 1300 774 468