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First-Time Investment Property Guide

  

1. What to Look For When Finding a Property


Think like an investor, not an owner-occupier. Key things:


  • Location
    • Population growth (areas with new infrastructure, schools, transport links).
    • Vacancy rates (ideally <2% = strong rental demand).
    • Proximity to jobs, shopping centres, universities, and hospitals.
    • Check local council zoning & future development plans.


  • Property Type
    • Low maintenance is often better for the first investment (apartments, townhouses, newer houses).
    • Strata vs freehold: strata means body corporate fees, but less maintenance.
    • Avoid very unique properties that appeal to a narrow market (harder to rent/resell).


  • Price Point
    • Stick to your borrowing capacity + buffer.
    • Compare with recent sales (CoreLogic, REA, Domain).


  • Tenant  Appeal
    • Parking, air-con, outdoor space, storage.
    • Safe neighbourhood.
    • Close to amenities and public transport.


2. What to Watch Out For (Red Flags)

This is where many first-time investors trip up:


  • Overpaying
    • Don’t buy just because “it looks nice.” Always compare to recent sales data.


  • Cash  Flow Traps
    • High maintenance properties (old homes with constant repairs).
    • High strata/body corp fees on units (pools, gyms, lifts).


  • Market  Hype
    • Buying in a “hotspot” after prices have already spiked (you want growth, not the peak).


  • Low  Demand Areas
    • Mining towns or single-industry areas → can collapse if industry declines.


  • Rental  Risks
    • Check vacancy rates. A property sitting empty for months destroys your cash flow.


  • Legal/Title Issues
    • Flood zones, heritage overlays, easements. Always get proper conveyancing advice.



3. How to Work Out Rental Yield (Like a Buyer’s Agent)


Buyer’s agents always crunch the numbers before recommending a property. Here’s how:


Step 1: Find the annual rental income

  • Look up comparable rentals on realestate.com.au / Domain.
  • Example:  Property rents for $600/week.
  • Annual rental income = $600 × 52 = $31,200.



Step 2: Work out purchase price & costs

  • Example:  Purchase price = $650,000.


Step 3: Calculate Gross Rental Yield

Gross Yield = Annual rent / Purchase price x 100

= $31,200 ÷ $650,000 × 100

= 4.8% Gross Yield..



Step 4: Calculate Net Yield (more accurate)


Subtract expenses:

  • Council rates: $2,000
  • Insurance: $1,200
  • Maintenance: $2,000
  • Property management: 7% of rent ≈ $2,184
  • Total expenses = $7,384


Ney yield = Annual rent – expenses/purchase price x 100

= ($31,200 – $7,384) ÷ $650,000 × 100

= 3.7% Net Yield.


What Buyer’s Agents Do

  • They target yields that balance with capital growth potential.
  • In capital cities → yields may be 3–4% but long-term growth is higher.
  • In regional areas → yields might be 5–6% but growth can be slower.


 Quick Checklist for First-Time Investors


  • Get pre-approval from your broker (know your borrowing limit).
  • Research suburbs: growth, demand, vacancy rate, infrastructure.
  • Compare rental yields (gross vs net).
  • Add up all costs (stamp duty, solicitor, building & pest, ongoing expenses).
  • Inspect property carefully (get B&P report).
  • Don’t get emotional — numbers first, always.
  • Have a buffer (3–6 months’ repayments in savings).



First-Time Property Investor Checklist


1. Financial Preparation

  • Speak with your mortgage broker to know your borrowing capacity.
  • Get loan pre-approval before searching.
  • Save a deposit + upfront costs (stamp duty, solicitor fees, building &      pest, LMI if applicable).
  • Keep a cash buffer (3–6 months of loan repayments).
  • Understand your borrowing strategy (interest-only vs principal & interest).


2. Research & Strategy

  • Decide on your investment strategy:
    • Capital growth (long term wealth)
    • Cash flow (rental income focus)
    • Balanced (mix of both)
  • Research locations: vacancy rates, rental demand, infrastructure, schools, jobs, transport.
  • Compare property types: house, townhouse, unit (consider body corp fees).
  • Avoid high-risk areas (mining towns, oversupplied apartments).
  • Check local council/zoning for future development.


3. Property Selection

  • Analyse recent sales prices (don’t overpay).
  • Estimate rental income using online portals + local agents.
  • Calculate gross & net rental yield (use your Rental Yield Calculator).
  • Assess tenant appeal: parking, air-con, low maintenance, safe neighbourhood.
  • Get a building & pest inspection before going unconditional.
  • Review strata/body corp fees if buying a unit/townhouse.


4. Risks & Red Flags

  • Avoid properties with high maintenance costs (old wiring, leaking roofs).
  • Watch for flood zones, easements, or heritage overlays.
  • Be cautious of developer incentives or “guaranteed rent” deals (often inflated).
  • Don’t buy based on emotion — stick to the numbers.


5. Managing the Investment

  • Choose a reliable property manager (fees ~6–8% of rent).
  • Set aside funds for repairs & maintenance each year.
  • Protect yourself with landlord insurance.
  • Track your property’s cash flow & tax deductions.
  • Review your loan and interest rate every 1–2 years with your broker.


6. How to Calculate Yield (Quick Formula)

  • Gross Yield % = Annual Rent ÷ Purchase Price × 100
  • Net Yield % = (Annual Rent – Expenses) ÷ Purchase Price × 100

Example: $600/week rent on a $650,000 property =

  • Gross Yield = 4.8%
  • Net Yield (after costs) ≈ 3.7%


7. Final Reminders

  • Think long term:  property is not a “get rich quick” play.
  • Diversify: don’t put all your wealth in one property type/area.
  • Use professionals: mortgage broker (us) , solicitor, accountant, buyer’s agent  (optional).
  • Keep learning: property investing is a marathon, not a sprint.

BOOK FREE APPOINTMENT

Disclaimer: 

 Your full financial situation will need to be reviewed prior to acceptance of any offer or product. 

Thuy Hook is an Authorised Credit Representative (no. 456333) of BLSSA Pty Ltd,  ACN number: 117 651 760 Australian Credit License number 391237 

EZ Financing PTY LTD ACN: 602 952 385

ABN: 74 602 952 385



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