Take a long-term view and realize that investing in property is usually a long-term strategy

The housing market is generally a 7-10 year cycle; there are always highs, lows and steady patches. Make sure you’re comfortable with how much you’re borrowing, and you know what your financial goals are. Plan ahead.  Make sure your cash flow is sufficient so that you can cover the mortgage and other outgoings on your property.

Being in the know

Keep in mind that the interest and related expenses you incur will be involved in the deal. Also make sure you factor in the capital gains tax you will have to pay if you decide to sell the property. Be sure to consult your taxation advisor. Take control of your investment by being properly informed on property values, trends and what is happening in the home loan market.

Consider using the equity in any other property you own.

Tapping into your home equity, or equity from another property investment, is a great launching platform for buying an investment property. Say your home is valued at $700,000, you owe $350,000 on your mortgage and you want to invest 10% of the equity (or $35,000) into another property. You can do so provided that you comfortably afford your repayments.

Think about buying with friends, family or work colleagues.

You can pool your resources with friends or family to help you get into the market. As long as together you can pay off the loan, it doesn’t matter if one party earns more, or has greater liabilities, than the other(s). The only difference is at the end of the loan term the property might not be owned in equal parts. An initial visit to the solicitor should result in a contract that outlines who pays what and how much of the property each applicant will own after paying off the mortgage.

Choose a loan tailored to your current needs.

There are many different home loan options to suit you. Will you go with an interest only or a principal and interest loan? Fixed or variable rate? Which features are needed? Will you provide a deposit or choose a 100% or even a 110% loan? Apply for a loan that suits your current needs and lifestyle because you can always refinance later. With new products entering the increasingly competitive mortgage market you can always change your loan situation further down the track if it’s advantageous to do so.

Visit a financial adviser and/or accountant

You also need to discuss your full monetary situation with someone with experience in advising on diversified investments. That’s because you need to make sure that your financial situation is improved by an investment property and that you can afford repayments without stretching the budget uncomfortably. Remember, you must make this investment work for you and your long-term strategy.