Can I Afford an Investment Property?

"Melbourne, Australia - Experts in the real estate business and those who have dished out money on property investments in the area reported a profitable venture. First-time investors often worry whether they can get good returns out of the whole deal, especially with the rising number of failures who didn't get their due rewards because of poor planning, and listening to bad advices.

Keep in mind that property investment can be a financial gamble if you just go along with the flow. Successes were attributed to proper planning and paying constant attention to the facts attributing to the investment, especially on the budget for the investment.

Increasing Market Value

Real estate properties, both commercial and residential, are known to increase their market value over time. Unlike other commodities, your home is bound to double its price in 7 to 10 years depending on the status of the market. If you bought the property at a price of $500,000, there is a big possibility of it doubling to $1,000,000 or more in a few years if the market turns to your favor.

This is one of the main reasons why entrepreneurs who are looking into long-term returns are delving into property investments - a surefire way to earn millions without wasting your time and money in the process.

Initial Investment

It is important to first consider the amount you plan to dish out for the investment of a property to avoid financial hurdles later on. Even if you are opting for the cheapest real estate in the market, knowing the amount for the investment in advance will open you to wider selections during look-up, as well as making sure that you won't have any problems paying for it later on.

Aside from using your own financial resource to pay for the property, most investors today prefer to make use of loans to fund the acquisition. This is a common strategy for those who have inadequate funds at their disposal. If you are planning to go for a loan, make sure that you can afford to pay for it later on. It won't do you much good to acquire a property just to end up in foreclosures. Take note of interest rates and payment terms while comparing it with your income.

Additional Cost To Purchase A Property

Aside from the initial price for the investment of a property, keep in mind that there are other costs to consider; and avoid financial problems with it during and after the acquisition.

In most cases, especially in Australia, you have to pay a deposit of 5% out of the total amount, as well as stamp duty and fees. It might be best to look into this in advance in order to prepare your finances for it when its time for you to acquire the property. You can ask a property investment agent to give you a rundown on possible expenses to get the property safely under your name.

Considering Cash Flow

Cash flow is the amount of money you will be getting from owning the property. One example is using it for rental. You need to consider whether the amount you will be getting from renting out the property is enough to return the initial investment within your designated time frame, as well as giving you enough leftovers for savings or to be used for other investments."