It’s one thing to think about investing in property, that’s easy. But planning and taking the leap to becoming an actual investor is another story. Some people procrastinate, sometimes for years, waiting for the perfect investment conditions to knock on their door. Other people simply don’t know where or how to get started, or what strategies for investment are best for them.
Of course the often conflicting opinions you get regarding the best ways to succeed in property investment don’t help. For every strategy or method you come across, it seems like there’s just as many advocates for the opposite.
At Peasy we’ve seen it all, and have come up with the following common-sense tips to help you make the best decisions for yourself:
- Learn from unbiased professionals
Independent, unbiased professionals are important allies in your property investment process.
It’s important to be cautious about who you get information from, as it’s not easy sometimes to identify what is true and what is hype, especially when it comes to sales pitches. Make sure to consider the credibility of the sources and the quality of their advice by asking yourself: do they get something out of helping me? Does it sound too good to be true?
Watch out for property investment advisors who have an interest in the property they are recommending to you, and of course approach any fast road to riches advice with a healthy dose of skepticism.
Agents, mortgage brokers, and property investment advisors that are trustworthy and reliable will help you achieve what you’re set out to achieve, but without pushing you into decisions that aren’t in your best interest.
- Planning is everything
Start with clarifying your reasons for investing in property in the first place, and this will be influential in your purchasing decisions.
Putting together a plan that steps you through the investment process will help you make sure you end up where you want to be. In fact, starting with your goal and working backwards to develop your plan is a good strategy. For example, are you looking to buy and quickly sell for short-term profit? Or are you looking for a long-term investment that you will own for years, pay off the mortgage as you wait for capital growth and work to achieve income from a positive rental return? Different goals need different plans in order to achieve them.
- Your borrowing capacity
It’s important you’re prepared to give your lender evidence of income earned enough that you can cover all the costs involved with both acquiring and from there holding an investment property, on top of your cost of living.
The only constant in life is change, and your finances need to be able to deal with the unexpected. Circumstances like a job loss, a vacancy in your rental property, or increased interest rates may need to be navigated. It’s important you are able to build in three to six months worth of living expenses and repayments as a safety buffer in order to protect against financial stress. It’s not necessary to have a big bank balance necessarily, as long as the combination of savings, cash flow, and equity meets acceptable standards.
- Go time!
When you’ve put together a plan to reach your goals, you can be confident in making your investment. You can procrastinate forever, telling yourself it’s too risky or expensive, how’s the economy, etc. Instead of waiting around for the mythical “perfect time,” you’ll know what you can confidently afford and can make smart decisions without being derailed by fear.. The current environment with low-interest and reduced repayments has made borrowing as affordable as ever, so the more you procrastinate, the more opportunities to create wealth you may be missing.
We can help you identify and plan the best investment opportunities for yourself, without having to talk to every bank in Australia.
If you have any questions around any of the terms within this email, please give us a call.