If you’re fortunate enough to be investing in multiple pieces of real estate, it’s best to diversify your purchases rather than buy all in one location or one category of property. Having a diverse portfolio makes it easy to weather any unexpected adversity in the housing market and generally enjoy a low-risk financial future.
Diversifying keeps you out of trouble
If you’re making mortgage repayments on many properties at once, you have to bring in rent payments from tenants to make ends meet. You can get into trouble by investing too heavily in an area that’s struggling. For example, The Sydney Morning Herald reported that one investor bought 19 properties in the Queensland mining town of Moranbah, and she was devastated when the mining industry took a downtown.
“About 70 per cent of my wages is going out on mortgage repayments, and rates are on top of that cost,” she said.
Downturns in industries like mining are just one potential reason why an area might struggle; there are many. If you invest in a wide variety of places, you’re not as vulnerable to one single market dip.
Research each new property you buy
Especially when you’re getting into an area that’s unfamiliar, it’s difficult to be confident you’re making a good decision. Therefore, the Australian Securities and Investments Commission recommends researching thoroughly to familiarise yourself with a new locality before you buy.
This means looking at growth patterns in property values over the years as well as understanding key indicators, such as rental yields and vacancy rates, that can tell you how likely you are to make a profit. Once you have this solid overview, you can start to find a mortgage broker and plan your purchase.
How we can grease the wheels financially
Finding success in property investment is tricky – you want to grow your wealth as quickly as possible, but you’d like to avoid dipping into your savings to do it. Our team of specialists can help find you low-interest loans.