Purchasing real estate for investment is one of the most lucrative avenues.

Among the different kinds of financial ventures you can delve into, purchasing real estate is one of the most lucrative investments you can make over a long period of time. With Australia’s stable economy sustaining property growth, investing in property can increase your wealth and secure your financial future. But you need to know and understand exactly what is an investment property in the real world.

The property market is more flexible yet less volatile compared to the share market: negotiation is a must when buying and selling to get the best price, but this does not significantly affect the market volatility because only serious, long-term investors are willing to conduct the due diligence needed to purchase properties. On the other hand, in the share market, you can only buy stocks at the market price during the very second that you purchased them and short-term speculators can drive stock prices up or down.

Before you jump right into the investment pool, here are several things you need to do—or remember if you are already an experienced investor—to help grow your wealth:

1. Check your finances

Given the large capital needed for this type of investment, you need to fully understand your personal finances. What are your assets? How much do you earn? How much do you spend? By answering these questions, you can get a sense of how much of your money you can invest or if you can pay a mortgage in order to purchase a property.

2. Evaluate your attitude toward risk

Your willingness to subject yourself to risk for greater gains affects major factors in determining the right property investment for you. There is no point in doubling your investment portfolio in a very risky gamble if you lose your sanity in the process, constantly worrying about losing everything you have worked for.

3. Determine your financial goals

You need to set realistic goals based on what you want to achieve within a certain timeframe, your finances, your set budget, and your attitude toward risk. By determining your financial goals, you would be motivated to work toward their fulfillment—whether it is to provide you with additional passive income or a retirement fund.

4. Set your budget

You need to identify expected and potential incomes and expenses from your investment to ensure you can cover the necessities and most—if not all—contingencies. By setting a budget, you can balance your income and expenses.

5. Do your research

It may seem overwhelming, but it is not rocket science. Having a degree in finance is not required to invest in properties; all you need to do is do your homework. You can get a lot of information about different properties you can purchase online through property listings or you can visit open houses and auctions.

Investing in property requires time and effort, but by considering everything mentioned above, you can formulate an effective strategy that suits your financial standing and goals in order to maximize the opportunities to earn quite a profit from these investments. Once you know what is an investment property for your circumstances then you can proceed.