Real estate can be a powerful asset for your future. It can diversify your investments, guard your wealth against inflation, and help you to enjoy a comfortable retirement. Additionally, property investing can help you to leave tangible assets to your heirs and ensure the financial security of your family.

It’s true that momentum builds once you begin investing in real estate. After you’ve acquired your first property, you have some skills to build on, and even more importantly, you have additional assets you can leverage as you look to expanding your portfolio.

But how do you find that perfect first property?

Study the Market

One of the aspects of real estate investing that intimidates people is the amount of money required to get started. You can often buy stocks for a dollar or two per share, but you’re not likely to find any real estate to purchase for less than six figures.

Therefore, you need to get your bearings. Familiarise yourself with the market in which you hope to invest. Tour properties for sale and see what kinds of amenities they have and how old they are. Compare the prices of residential and commercial properties so you can make educated decisions about what kind of property is right for your financial situation.

But don’t stop there. You also need to get your bearings in regards to lending. Find out about interest rates for investment properties. They’re usually higher for investment properties than they are for primary residences. You’ll also want to find out how much lenders expect you to put down on a loan, and how much is sustainable for your financial means.

Financial Planning

Once you’ve researched the market and the lending landscape, you’ll have a better idea about whether or not real estate is a positive investment decision for you. Paying down your own debt is the best place to start when you’re preparing your finances. Lenders will be interested in your debt ratio, so the less you have, the better off you’ll be when it comes to qualifying for loans.

Saving for a down payment is the next step. Windfalls certainly help as you save for your down payment, but don’t underestimate the power of steady, consistent saving. By trimming your budget and saving every month, your down payment fund will grow steadily.

Decide on Price

Many people wonder what price to shoot for with their first investment property. Unfortunately, there’s not a good one-size-fits-all answer. One investment strategy for first-time buyers may be to purchase a positively geared property, where your potential rents cover your mortgage and expenses. In most cases, inexpensive fixer uppers don’t garner the kind of rents necessary to cover the mortgage, even though there are plenty of people who are looking for low rents.

On the other end of the spectrum, you’ll be able to charge more rent for a high-end property, but there often fewer prospective renters to choose from. These will also require a far higher initial investment, and ongoing fees can cause trouble for your cash flow.

Most first time investors find that they do best with a lower-to-mid-priced property that doesn’t require too much in the way of repairs and maintenance. While there’s no perfect answer for everyone, before you begin searching for properties, settle in on a target price that will be manageable in terms of down payment and future cash flow.

Find Your Property

With all of this information at the ready, you’re ready to begin the fun part. As you search for prospective properties, be as objective as possible, and remember that you’re not searching for a home for yourself; you’re searching for an investment that will be an asset to you and your loved ones for many years.

You’ll have to start thinking like a landlord; considering location, amenities, and liabilities more than you think about front porches, views, and charming garden spaces. You can always spruce up a property that needs updating, but you can’t change its location.

Find Expert Advice

Learning about real estate investing from a professional is one of the best things you can do to start your investing strategies off on the right foot. For a free one-to-one investment strategy session with an experienced Property Adviser, get in touch with us at Full Financial Services today.