As a first-time buyer looking to purchase an investment property by 2024, the prospect can seem daunting. With property prices projected to continue rising over the next couple of years, you may wonder how you can possibly save up a sufficient deposit in time. The key is to be strategic with your saving and investing, so you can maximise your deposit contributions while the market conditions remain favourable. By following some simple steps around budgeting, choosing the right location, securing finance and timing your purchase, your goal of owning an investment property in the next two years is very achievable. This article provides practical guidance on the actions you need to take now to purchase your first investment property before 2024. With focus and dedication, you can make it happen.

Setting a Budget and Savings Goal for Your Investment Property

To purchase an investment property within the next three years, you must set a realistic budget and savings goal. Determine your maximum purchase price. Consider properties in areas with solid rental demand and account for a 20% down payment, closing costs, and an emergency fund. Aim for a mortgage payment, taxes, and insurance totalling no more than 30% of your income.
 
Save aggressively for your down payment. Open a high-yield savings account and set up automatic deposits of at least 20-30% of your take-home pay. Look for ways to cut $500-$1,000 from your monthly budget to put towards your savings goal. Consider taking on a side gig to generate extra money for your investment property fund.
Research mortgage options and interest rates. Meet with mortgage lenders to discuss loan terms, interest rates, and options like adjustable-rate or fixed-rate mortgages. Check your credit and make sure there are no errors before you start applying for preapproval. The higher your credit score, the lower your interest rate will be.
 
Create a timeline for purchasing. Break down how much you need to save each month to reach your down payment goal in time. Account for the preapproval process, searching for properties, making offers, inspections, and closing which can take 3-6 months total. Stay disciplined and stick to your timeline to achieve your goal of purchasing an investment property within the next three years.
 
With diligent savings, careful financial planning, and realistic expectations, you can purchase your first investment property. Stay focused on your long term financial goals and don’t get distracted by short term temptations. Your future investment property will be worth the sacrifice and hard work.
 

Choosing the Right Location and Property Type

When investing in property, choosing the right location and type are two of the most important decisions you will make. Location The location of a property significantly impacts its potential for capital growth and rental yield. Analyse locations with strong infrastructure, job opportunities, amenities, and public transport. Areas undergoing gentrification often present opportunities for higher capital gains. However, higher yield areas may generate better cash flow in the short term. Consider your investment goals and risk tolerance when choosing between growth and yield locations.
 
Property Type
The two most common investment property types are residential (houses and apartments) and commercial (offices, retail, and industrial). Residential properties generally provide more stable yields, while commercial properties can achieve higher returns. However, commercial properties also tend to be riskier, often with volatile rental incomes and higher vacancy rates.
For first-time investors, a residential investment property may be a safer choice. Apartments, in particular, require less maintenance and are easier to manage than houses. They also typically attract more stable tenants and cash flows. When ready to take on more risk, you might consider diversifying into commercial properties to spread your risk across different sectors.
With the right location and property choice based on your goals, you will be well on your way to purchasing an investment property. However, you must ensure you fully understand the costs, risks, and responsibilities that come with your investment before signing on the dotted line. Proper due diligence and financial planning are essential to your success as a property investor.
 
Getting Pre-Approved for a Mortgage
To purchase an investment property in 2024, getting pre-approved for a mortgage will be a crucial first step. A pre-approval letter from a lender confirms the amount they are willing to lend you based on your income, assets, and credit score. With a pre-approval in hand, you can make a competitive offer on a property with confidence.
 
To obtain a pre-approval, you will need to provide documents verifying your income, employment, tax returns, bank statements, and any other assets. The lender will evaluate your debt-to-income ratio to determine the maximum mortgage amount you can afford while still meeting your other financial obligations. They will also check your credit report and score to assess your creditworthiness.
 
Aim for a down payment of at least 20% of the purchase price to get the best mortgage rates and terms. The higher your down payment, the less you need to borrow and the lower your interest charges will be. Work with your lender to determine a mortgage amount that fits your budget and financial goals.
Shop around at different banks and mortgage lenders for the best rates and service. Compare fixed-rate and adjustable-rate mortgages to see which offers the most stability or opportunity to save on interest charges over the life of the loan. Once you select a lender, you can lock in an interest rate for a period of time while you search for a property.
 
When you make an offer and it is accepted, the seller will expect a pre-approval letter proving you are a serious, qualified buyer. Be prepared for the legal aspects of the home purchase such as drawing up purchase contracts, completing property inspections, and closing procedures. Stay in close contact with your lender, real estate agent, and lawyer to ensure a smooth process of buying your investment property.
 
With advance planning and preparation, you can achieve your goal of purchasing an investment property by 2024. Obtaining pre-approval for your mortgage financing is the critical first milestone to get you started on the path to real estate investing. Stay focused on saving diligently for your down payment and work closely with professionals who can guide you through the purchase. Your patience and perseverance will pay off!
 

Finding and Working With a Great Real Estate Agent

To find an investment property that suits your needs and budget, partnering with an experienced real estate agent is crucial. Look for an agent with a proven track record of helping first-time homebuyers and who specialises in investment properties. Interview a few agents and ask about their experience, credentials, availability, and commission rates. Ensure they understand your investment goals and will advocate on your behalf.
 
Conduct a Comprehensive Property Search
Once you have selected an agent, work closely with them to determine your ideal property criteria, including location, number of bedrooms and bathrooms, amenities, and price range. Your agent will search property listings that match your specifications and arrange viewings of potential properties. Be prepared to act quickly if you find a property that interests you, as investment properties often sell fast.
 
Negotiate the Best Deal
Your agent will help determine a competitive offer price based on the asking price, property condition, and current market rates. They will submit your offer to the seller on your behalf and negotiate to reach an accepted offer that satisfies both parties. For investment properties, aim for at least a 10 to 15 percent discount off the asking price to ensure good cash flow and return on investment.
 
Handle the Legal Process
Once your offer has been accepted, your agent will guide you through the legal steps to finalise the purchase. This includes conducting professional inspections, signing an agreement of purchase and sale, arranging financing, and overseeing the closing or settlement process. Your agent will review all documents to ensure the terms are fair and advise you of your rights and responsibilities before signing anything legally binding.
Working closely with a real estate agent you trust will help make your first investment property purchase as seamless as possible. Let them handle the stressful details so you can focus on finding a property with excellent potential for strong returns over the long run. With the right agent by your side, you’ll be well on your way to becoming a savvy real estate investor.
 

Tips for First Time Home Buyers Entering the Real Estate Market

As a first time home buyer looking to purchase an investment property in the next few years, following these tips can help set you up for success in today’s real estate market:
 
Build Your Savings
To become mortgage-ready by 2024, start saving aggressively for a down payment now. Aim for at least 20% of the purchase price to avoid private mortgage insurance (PMI) and get the best interest rates. Make saving for a down payment your top financial priority and cut out unnecessary expenses. The more you can put down, the better position you will be in as a buyer.
 
Check Your Credit
With a higher credit score, you can qualify for a better mortgage with a lower interest rate. Check your credit report for any errors and dispute them. Pay down high-interest debts like credit cards to improve your credit utilization ratio. If needed, you still have time to take action and improve your score before you start applying for preapproval in 2023.
 
Research Neighborhoods
Start researching potential investment neighborhoods now based on key factors like home values, demand from renters, job opportunities, and amenities. Narrow down locations you’re interested in so you can monitor the market over the next couple of years. Look for neighborhoods with stable or increasing property values and a low vacancy rate to ensure strong, consistent returns.
 
Meet with a Mortgage Broker
Speaking to a mortgage broker in 2023 will help determine how much you can borrow and the interest rate you may qualify for based on your financial situation and credit score. They can also provide guidance on other things you can do to improve your mortgage eligibility over the next year. Meeting with a broker does not obligate you to use them for your mortgage, but it will give you valuable information to prepare to enter the market.
 
Taking action today and diligently working towards your goal of purchasing an investment property in 2024 will put you in a strong position as a first time home buyer. Stay focused on these key steps over the next couple of years and you will become mortgage-ready to take advantage of opportunities in the real estate market.
 
 
You now have a solid plan to purchase your first investment property by 2024. By following the steps outlined, saving aggressively each month, and investing wisely, you can realise your dream of owning rental real estate ahead of schedule. Though the road may not always be smooth, staying focused on your financial goals will keep you motivated to push forward. With continued diligence and dedication, you will have the keys to your first investment property in hand right on target in 2024. You’ve got this!

Bella