Property investment involves legalese, management, education, financial and philosophical skills, are you truly ready to jump into this commitment?
Property Investment is as serious as starting a business, if you implement strategies incorrectly it could end in disaster.
Below are some areas to think through to determine whether property investment really is for you.
Investing in property requires capital and a steady income. The cash deposit needed to acquire property can be significant so talk to your broker to find out how much you require.
Your income including the expected rental income will allow you to service the mortgage. Just because you can afford the mortgage doesn't necessarily mean you should take out the loan.
You should work out the amount of debt you feel comfortable with and have contingencies in place to cover increased interest costs, council rates hikes etc.
Also, carefully consider worst-case scenarios such as what if you were to lose your job. How much do you have to put into the property each month?
Top tip: Remember if you can get through the downside the upside takes care of itself.
It is impossible to become wealthy from property without taking on leverage. However, there is only one thing that sends people broke and that is too much debt.
Remember that the number one rule of serious investors is: Never lose your capital.
As a beginner investor, you won't be comfortable with large debt or vacant properties. However, over time you must learn to be calm in the face of these risks.
Whether you enjoy taking a chance, or you tend to be more risk-averse, it’s essential to have someone to push your comfort zone.
However never push too far as losses can be catastrophic to your confidence and to your wealth creation journey.
Are you interested in investing for the long term or the short term?
Long-term investing means buying and holding investment properties long term for cash flow, this could mean 10-20 years or more before you see a good return.
Investing for your future including your retirement and your family prosperity requires great patience and discipline.
Do you have this?
To be successful in property investment, you don’t need to know everything but you do need to be willing to learn.
We highly recommend that you just don’t go out and purchase a property without reading books on property investment, going to seminars or getting a property coach.
To be a successful property investor requires a positive mental attitude so you must be prepared to continually invest in yourself and improve your outlook on life.
How much time can you commit to the day-to-day tasks required to be successful in property investment?
In the beginning, you’ll spend a lot of time researching and learning about property investment.
The first investment property you purchase will always take the longest but that is okay.
You will need to learn the best area to purchase in, strategies you want to implement, how to deal with agents, find out the values in the area and arrange finance.
Once you purchase an investment property you can hand it over to a property manager to look after it for you, but you must ultimately be responsible for the performance of your manager.
Once you have a manager you can trust then you can spend valuable time with your family or on other interests.
There are many well-intentioned landlords to share their opinions but be careful who you listen to, as everyone is at a different stage, which means different company structures, different types of lending and different property investing strategies.
Only take advice from someone who has no ulterior motives, who knows your circumstances and who has personal experience with multiple strategies and has preferably been through several cycles.
Overall property investing is exciting and a hands-on investment strategy. I have been doing it for many years and have received great rewards from it. I've gone through the ups and downs of the property cycles and have come out stronger but still continue to learn and help our students succeed at any level.
I have been a property investor for over 13 years and have created a multi-million dollar portfolio including residential and commercial. I could go on about this but I’m not here to impress you but to impress upon you that YOU TOO can create wealth through property whether that be $100K or $5 million. I've been through the boom - bust - boom so I know what it takes to stay in the market. I live locally in Otahuhu with my wife and new baby boy. I love to help and teach people about buying well and for long term. We can all make a quick buck but the real strategy is creating long term wealth.
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