Your guide to buying an investment property in 2021


Almost one in two Aussies say that property is their first choice when it comes to investing but many feel overwhelmed by the number of steps required to purchase a property.

Once you have saved up your deposit, here is a step-by-step guide to have you investing in property by the end of 2021.

January-February: Strategise - know your why and create an investment strategy

month by month guide to investing in property

Why should you have a goal? You need a reason and vehicle that motivates you to stick to your investment strategy. Take a moment to pinpoint your big picture lifestyle goal - is it financial freedom, working for yourself, semi-retirement, overseas holidays, or helping underprivileged communities? Once you've crystallised this, you can begin working on your strategy.

Next, determine where, when and what you want to buy. Your goal will inform this decision, for example, you might buy a blue-chip property for long-term growth or you will build a duplex for cashflow.

March: Secure finance 

A lot of people are under the impression that you need millions of dollars and a huge borrowing capacity to invest, but this is far from the truth. Getting a mortgage is not always a simple thing to do, so you may need to consult a mortgage broker. They will assess your financial position and explain how banks will see it, explain the different types of interest rates, ascertain what loans are likely to suit your goals and strategy, determine the best bank and outline any changes you'll need to make before applying for your home loan of choice.

However, if you're going on your own, you need to show lenders who you are, what area you're buying in, what type of property you're buying, your intent behind the purchase and how much you need to borrow. Be sure to have a strong buffer for costs, as it's easy to underestimate, and saving enough just to cover your deposit will only lead to financial strife.

April: Hire the dream team

To successfully finance and purchase properties, and to meet a multitude of legal and practical requirements on time and within budget, you need to build up a team of professionals.

This could include a buyer's agent, a mortgage broker, a financial planner, an accountant, a solicitor or conveyancer, a building and pest inspector, a quantity surveyor, and an insurance representative.

May-July: Find suitable investment property

Fewer than 5% of properties available are investment grade, so how do you find one in a region that is ripe for growth? Ideally, you will find the property trifecta - instant equity, cash flow, and growth.

To achieve this, shortlist properties based on the following factors: good regional growth drivers, presence of several different industries, approved increased government spending in the area, transport links, low local unemployment, low vacancy rates and proximity to education and childcare facilities. Searching can take some time, so be patient.

August-October: From signing to settling

Once you've found the dream property, placed a bid and been accepted, contracts must be signed between you and the vendor.

Make sure you take note of any special conditions, disclosures and insurance in your contract of sale. It's also important to know what can be negotiated in a contract of sale - this includes the cooling-off period, the settlement period, deposit amount and fittings and fixtures. On settlement day, all representatives of the parties, including any financiers, communicate with each other to exchange legal documents.

November-December: Becoming a landlord

Once you've bought an investment property, it's important to understand your responsibilities as a landlord to avoid costly mistakes, maximise your returns, and protect your investment. This includes understanding the legislation set out by the state or territory level of government and appointing a property manager - don't just go with the cheapest or biggest agency.

When looking for quality tenants, screen them by running a credit check, assessing their employment and rental history, and contacting their references. Once the lease is signed, remember to budget for upkeep on the property in order to maintain your investment.

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Lloyd Edge is the director of Aus Property Professionals and author of Positively Geared. He holds a Diploma in Property Services, is a fully licensed real estate agent and holds buyer's agent licences in multiple states. Lloyd is also a member of Property Investment Professionals Australia, Property Investment Council of Australia and Real Estate Institute of NSW.