Budgeting Tips for First Time Property Investors

When planning to invest in your first piece of real estate, you want to be sure that you have developed a sustainable property investment budget and one that you can realistically follow.

Budgeting itself is a simple concept and it is vital in property investment, as it helps ensure you are spending less than you are earning. Budgeting also assists you with balancing your income and expenses and ensures you take a positive, proactive approach to managing and building your portfolio, whilst treating your property investment as a business.

Madeleine and her team have complied a list of budgeting tips to help you achieve financial success in your first property investment, which can set you up for a long and prosperous property investment journey.

1. Set Goals (both short and long term)

When it comes to budgeting for property investment, the first step should always consist of setting goals for both the long and short term.

A useful way of making your goals more powerful is to make them SMART, which stands for:

S – Specific

M – Measurable

A – Attainable

R – Relevant

T – Time-bound

Goals can help to combine your acquired knowledge and experience and provide the focus that you will need to make the very most of your property investing journey as well as achieve long term and sustainable wealth.

2. Understand Your Salary and Income

Understanding your exact salary and income is the framework of your budget and allows you to put your goals into action.

Knowing your gross salary (the amount of money you earn before tax) and net salary (how much you take home after tax is deducted) will help you avoid any miscalculations that can easily set your budget off track.

Understanding your borrowing capacity is another crucial step, which will take into account what you can currently afford to borrow based on:

• Your annual salary
• Your monthly expenses
• The type of loan and current interest rate
• The loan term
• Repayment Type

3. Break Down the Costs of Buying an Investment Property

Investing in property is a popular wealth creation and has the potential to provide you with solid financial returns. It is important to be aware of these upfront and ongoing costs when considering any property investment purchase.

4. Do Your Research

Adding market research to your budgeting process is another valuable way that you can analyse your property’s value and performance amongst its field. When you research the market you are able to keep up-to-date with the changing prices and market trends which in turn help ensure that you are investing in locations that will give you long term returns whilst preventing you from making a decision you may later regret.

5. Track Your Spending

Once you have ticked off the above tips, it is a good idea to regularly track your spending habits. There are many online, reliable cloud-based accounting software programs that allow you to easily track and account for your property investments and portfolio performance.

These programs can also help you with your cash flow planning and financial management so you can see how each property is tracking against its forecasts.

6. Update and Adjust Regularly

Remember that property is a long-term investment and as you build up equity, you are able to consider purchasing additional properties to add to your portfolio.

Continually updating and adjusting your budget on a regular basis allows you to take into account any changes caused by the condition of the property or the property market.

Hicks Real Estate is a local, knowledgeable and professional team of real estate agents who specialize in the buying, selling and renting of properties. For information about the local market and investing in property give the team a call today on: 07 3355 6845.