How to Buy Investment Property: Beginner's Guide

Investing in property is a serious business because its related costs are often an ingoing financial commitment. Buying your first property can be a daunting venture, considering all the details that require your attention, the financial language you need to learn and the usual beginner's fear of failure. A mortgage broker can minimize the confusion and anxiety of entering the property market by teaching you how to buy an investment property and by finding you the best deals for financing.

Investment plan: Buying investment property is an effective strategy for building wealth in the long-term. The market will occasionally rise and fall and experience steady periods for which you should be prepared with a long-term investment plan. Your first step should also include a consultation with a financial planner or accountant who can assess your readiness to invest in property.

Costs and tax consequences: Costs for maintenance, interest, depreciation and other property-related expenses are generally tax-deductible which is why investors adopt a strategy known as negative geared. Negative borrowing is a situation where loan repayments, interest costs and other mortgage fees exceed rental income. The difference is an allowed deduction that can lower your tax due on other income.

Research before buying: News articles, business updates, and reports of reputable property research organizations can provide essential information about prospective investments.

Home equity: Existing property or other investment property may have built up a value or equity that you can use to invest in other investment properties. This can reduce the initial cash outlay or down payment ordinarily required in mortgages.

Loans: Various loan types are available and bear different features that are best suited for specific investors. A mortgage broker often knows where to get the best loans for your situation and can show you how to buy investment property.

Investment pool: Prime properties possess great income potential but they may be priced beyond the budgets of most new investors. Buying property together with family or friends is another option for building an investment property portfolio. Consider a family guarantee which allows a parent or any family member to use equity in a home as security for a related investor's mortgage.

Getting started in property investment can seem overwhelming. All you need is an investment plan and a mortgage broker to teach you how to buy investment property, and you'll soon experience the financial rewards that are driving many investors into this type of business.

Source by Miriam Bronkhorst