3 easy ways to find good properties

3 easy ways to find good properties

How do you find a good property to purchase? Most property investors find their own ways to identify a good investment. A good investment is an asset with the right price, surrounded by different socio-economic drivers that fuel both cash flow and yield.  While many people would say that the number of properties in a portfolio is a gauge for an investor’s success, it is far more pertinent to focus on certain characteristics of an asset in order to actually achieve their long-term goals.   A good checklist is:  Make sure to pay the right price  Before purchasing a property make sure of whether or not you are paying the right price. Regardless of the bank’s evaluation of the property take time to assess it for yourself with the help of property professionals.  Do your own evaluation first just to figure out where it’s at by speaking to different agents and everything… And then if your still not sure go and get the evaluation independently.  Buy in the right area  Like many property investors, the location of an asset plays a big role in the decision-making.  The right area is surrounded by enough infrastructure and places, communicable to the job centre, hospitals, universities and all and are in areas that are poised for economic growth in the coming years.  Identify the right ‘supply and demand’ rate  An area’s population is telling of the rate of supply and demand for dwellings, hence, a growing population is always a good news for a property investor.  If you can hold onto a block of land, which is where there’s not enough supply, then you can...
What to do when you’re ‘maxed out’ by the bank 

What to do when you’re ‘maxed out’ by the bank 

Every single investor has had to deal with different types of hurdles throughout their property investment journey – from choosing the right property and managing your assets to balancing equity and debt.  Thor Wedden sought the help of Smart Property Investment’s Phil Tarrant, co-host Tim Neary, and wHeregroup founder Todd Hunter to find a way out of his predicament.  According to him, after buying a few properties, which is valued at $2.2 million and has around $1.6 million in debt against it, he was afraid that he may have “maxed out” in terms of his capacity to keep growing his portfolio.      Is there something an investor can do once the bank says he can’t borrow anymore?  Todd Hunter: Well, it looks as though part of the issue here is he’s talking about his LVR being at 76 per cent, and anything over 80 per cent then incurs mortgage insurance. It doesn’t mention too much about the servicing side of things, whether he can actually physically borrow more money or be able to repay more money, so I’ll assume he’s talking sort of more the LVR side. Couple of options: You can value add onto the portfolio that you already have. I say that in ways of doing some cosmetic renovations to increase the value of the properties, who then will allow you to actually sort of borrow against that.  If they’re already sort of neat and tidy and there’s not much value add to be done, then you do have that option of going into that mortgage insurance territory. If it’s for investment purposes, it can be capitalised and it is a tax deduction,...
Why you should ignore the property headline ‘noise’ 

Why you should ignore the property headline ‘noise’ 

Guy Williams have spent over 20 years in a remarkable investment journey and has since maintained a 37-strong property portfolio. Aside from good education and correct strategy, he attributes his success to his ability to “ignore the noise”.  WHAT NOISE?  Guy told Smart Property Investment: “I just kept doing it and ignored the noise. I ignored the noise. I had a buy and hold strategy, but while I was doing that last year, people were saying, ‘Are they going to remove negative gearing?’ That’s a little bit of noise.   But over a 20, 30, 40-year time frame, it doesn’t really matter. I’ve seen huge interest rates, I’ve seen low interest rates. You see all these things happen, but over that length of time it doesn’t really matter. I think the noise gets in the way of people doing things.”  WHY?  While it is important to keep yourself up-to-date regarding movements in the property markets, it is equally vital to know which headlines are not worth mulling over, according to Guy.  You read a newspaper, they’re looking for headlines, they’re looking for stories so they want something like, ‘Interest rates are about to shoot up!’ or ‘They’re going to go ballistic in 2017’. So you’re going to think, ‘I’d better not invest. I’ve missed the boat’. Or maybe there’s a price bubble and so property prices are going to crash, so you say, ‘Oh, thankfully I’m not in it’. There’s all this noise and it comes out on a daily, weekly, monthly … It’s mainly just ignoring that,” he said.  WHAT TO DO?  Instead of worrying himself over “doom and gloom” headlines, Guy...
Diversify and take advantage of all property cycles

Diversify and take advantage of all property cycles

A key decision investors face when they are growing a portfolio is whether or not they diversify into different locations.    There are many different reasons why an investor might focus on a single area or purchase in different locations. Aside from the investment thinking behind the decision to diversify or not, there are also financing implications that you should consider.    Having a well-diversified portfolio means that your assets will likely grow at different paces at different times. Good finance structures allow you to borrow against individual assets, rather than your total portfolio position.    This means a well-diversified property portfolio can provide a more consistent source of equity growth in your portfolio, making it easier to release equity over time and helping investors grow their portfolios during slow markets.    The key to this is ensuring that your loans are not cross-collateralised, a common financing problem for investors. A cross-collateralised loan is a loan secured against more than one property.    Having each loan only secured against one property means your properties are separated in financing terms. This allows you to release equity from one property if it has grown in value, regardless of how the rest of your portfolio is performing.    A case, for example, of diversification below can help you release equity:  David and Susan are best friends and have decided to make 2017 their year to invest in property;  David’s strategy is to buy what he knows. He buys seven investment properties in his local area;  Susan takes a diversified approach and opts to buy seven investment properties in seven different locations;  Both...
Investment tip: ‘Plan with the end in mind’ 

Investment tip: ‘Plan with the end in mind’ 

One of the main questions that is common among budding property investors—the all too familiar clashing of investment goals and personal considerations. While both are important, there are completely different mindsets required to deal with them.  Do not confuse knowing your city neighbourhood, where you live and where you’ve grown up, with knowing a market because they are two completely different things. Living in a suburb means you know the social amenities and the busy roads … but that’s largely irrelevant if the outlook of that broader city is not particularly good—there are two different mindsets required there. You need to have an investor mindset and also see property as a financial instrument.   Investing in properties is obviously a big decision to make as it entails risks that are quite costly for most people. Someone who’s only beginning to dip their toe in the business of creating wealth through property, must already start thinking about his ideal ending.  All big decisions, plan with an end in mind. So, what is the end in mind? The end would surely be “you’re contemplating investing in property because years down the track, you don’t want to be strapped to a government-funded pension which isn’t going to provide much of a lifestyle.”  “Is buying a property in your local suburb going to help you do that?”  That will be based wholly and solely on your personal requirements and emotion. On the other hand, when you take a critical look at this massive country called Australia where there’s a lot more opportunities, will one of those opportunities be better for you?  While your local...
Habits of investors who have grown massive portfolios 

Habits of investors who have grown massive portfolios 

The habits that differentiate these investors with massive portfolios from those who have only succeeded in purchasing and maintaining a couple of investment properties are:  Understand the fundamentals Successful investors, first and foremost, familiarise themselves with the most basic fundamentals of investing in properties. It comes down to your ability to hold the property, which comes down to cash flow.  Asset selection should be an important part of the process for property investors looking to succeed in the business of wealth-creation. You can have one property that takes all your negative cash flow or you can have 10 properties that takes that same amount of negative cash flow—it is one of the fundamentals. That is a leveraging get off smart cash flow management.    Balance cash flow and yield Some of the factors involved in maintaining the portfolio’s cash flow of successful investors are rents and rental yields. Striking a good balance between the two is one of the most important secrets to success in the business of creating wealth through real estate assets.  The bigger investors understand how much negative cash flow they can afford on a month-to-month basis, and they balance that.    They use a ‘strategic point of view’ Since getting finance has become harder, smart investors always make it a point to ‘strategise’ in order to maintain good serviceability and borrowing capacity.  They’ll take on strategies like ‘Where in my portfolio can I add a granny flat that’s going to increase my cash flow and increase my serviceability?’ They’ll look at it from a strategic point of view. They think  differently around things so you can look...