10 steps to get ready to invest in property
For some people, budgeting and saving and planning for their future is the norm, but for others it can be hard to know where to start.
Here is a list of the 10 things that you should consider doing to get you ready to invest soundly and securely in property, whether it be your first home or investment property:
Work out what your goals are for your future, what do you want to achieve/have?
What is your family's financial situation - cash flow, debt, income and expenses?
Work out what your surplus family cash flow is family income less tax and expenses
If there is no family surplus work out what expenses you can cut down or eliminate, discretionary expenses that you don't need to spend, how many coffees or bought lunches do you have a year, the little things add up!
Save an Emergency buffer so you are not living week to week, at least a few months worth of living expenses should be set aside in case something goes wrong, this buys you time
Work out what bad debts you have, ie credit card debt, personal debt for things that are not investments, these are classified as bad debt and start a savings plan to reduce theses or sell the non-investment grade item you have purchased with it and pay the balance off
If you don't have a cash gift from your family, or first home equity, then you will need to save for a deposit, it is only going to get harder to do this, so the sooner you start the better, maybe move back home to save on rent if this is an option for you
Get your finances up to date, latest tax returns lodged, find out what your borrowing capacity is, and consider insurance to protect your income earning ability before you take out a mortgage to protect your partner and/or family for worst case
Work out what property to buy first, does it need to be mainly cash flow positive, cash flow neutral but with good capital growth prospects, or is capital growth the priority and it can be negative cash flow, which one you choose first can determine how far and how quickly you can go
Research and target the areas to source the above property - research, analyse, find, negotiate and buy well