6 things to do before investing in property

Tips

You may be considering investing in property as a way to grow your wealth – or boost the balance of your self managed super fund. Here are six things to consider before you commit to purchasing a property as an investment: 

  1. Check your risk profile. Ask yourself if you’re comfortable carrying debt and making additional investments.
  2. Ensure your income is stable and adequate to support the debt if a tenant moves out or unexpected costs come up.
  3. Develop a life plan that considers events that may arise, such as having children, travelling, studying or changing jobs. You can accommodate these events if you have a clear, documented plan.
  4. Assess each investment on its own merits and risks. Expected returns – income plus capital gain – must exceed the borrowing costs over the long term.
  5. Invest in what you know. At least to start, stick to one suburb or city and know the market well, including the public transport on offer.
  6. Plan to lift the rent. Most properties are sold on a multiple of the yield they produce. Increasing the rent is a starting point to lifting the property’s value.
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Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate for you. All applications are subject to Macquarie's standard credit approval criteria.