Securing a powerful property investment portfolio can be an amazing source of financial security. But when getting started, it is vital that the right steps are followed.
Why are you doing it?
Be clear about your reasons for choosing to invest in property instead of other asset classes such as shares. Some do it for the wrong reasons, such as trying to keep up with their neighbours or friends who are investing. Property investing is not a competition.
Understand the risks
Just because prices have been growing consistently for a number of years doesn’t mean they’ll go on indefinitely. Growth in value is rarely consistent and linear. Precise capital growth is hard to predict. Sometimes there are vacancies or tenants that default. There are ways to reduce these risks, but they remain a part of investing in property.
If the area is in high demand, discounts are virtually non-existent as vendors know they could get the price they want.
Be a long term investor
There’s no guarantee that you see growth quickly. While some areas may experience rare short-term surges, the majority of suburbs go through periods of slow to no growth before values rise. Be prepared to hold your property for at least 5 years if you want to make a solid gain.
Make sure you have a solid cash flow to maintain your property to avoid selling prematurely.
Learn, learn, learn
While you’re building your deposit, learn everything you can about property investing. Buy a few books from a range of authors to get a variety of opinions. Once you start hearing the same things over and over, you know you’re ready.
Sort your finances
Create a budget so you live well within your means. However, make sure your investment doesn’t stretch you too far.
Buy and hold
Capital growth is the easiest strategy if you know what to look for. Start off with this basic strategy. You may never need any other strategy. But even if you stretch into others, they’ll all benefit from having underlying growth.”
Buy the best property
Plan to buy outside your own backyard. Go wherever the best property market is that fits your budget. Learn how to read a property market from its supply and demand qualities, not from your past experience with the neighbourhood.
Get close to the CBD
The closer to the CBD, the more convenient the property will be for tenants. Proximity to amenities that cities provide is a huge demand drawcard.