8 Steps That Successful Property Investors Always Take - Written By Alex Minter
Admit it, you've heard a property investment success story somewhere along the line. You may have even heard of the not so pleasant experiences. Either way, your friends have invested, your colleagues invest, you may have even been encouraged by your parents from a young age to work hard and purchase property as soon as you can. You've read real estate magazines, you browse for hours on real estate websites and when it comes time to pull the trigger, you stop........ You're not alone!
Its no surprise really. Listening to the opinions and experiences of your peer groups, family, media commentary, friends at the BBQ and old Bill next door can confuse many investors trying to take the right steps. Those new to property investment may also find learning the right process overwhelming. It may not seem like it sometimes, but investing in property can be relatively straight forward. Having the privilege to assist many investors over the years, it has become quite clear the seasoned investors follow a process consisting of the following.
1. SET GOALS
I can't stress this step enough as it is the most important step of all. It's very rare we hop in the car and start driving with no destination in mind. We generally know where we are heading, a reason for going and the roads we need to use to get there. Its the same for investing in property (and most areas of our life really). It is important we understand why we are pursuing an avenue such as property investment. It is equally important we understand our own strategy and what you're wanting to achieve. Set goals!!!
2. CHECK & UNDERSTAND YOUR FINANCES
Don't immediately assume you can or even can't afford to invest. This is where building a relationship and engaging with a reputable mortgage broker is worthwhile. If you walk straight into a bank and meet all of their lending criteria's, that bank will more than likely offer you a loan and borrowing capacity for a purchase. This is great, however the bank you have approached can only offer you the lending products that particular bank supplies. In most cases this is not a problem but where a mortgage broker is extremely valuable is when they find a lending product that is right for your investment property. Finding the right property is extremely important but finding the right lending product to compliment your investment strategy is an equally important part of the process.
3. GET A PRE-APPROVAL
Once again, using a mortgage broker will assist this step. Having a pre-approval in place gives you a clear understanding of how much you can comfortably spend on your purchase. This is always up to the discretion of the purchaser but my suggestion is, if your pre-approval says you can borrow $800,000, try not to spend exactly $800,000. Spending under your maximum borrowing capacity will leave some room for unexpected expenses that may arise down the track. In some cases, not maxing your borrowing capacity out may get you into your next investment rather sooner than later.
4. UNDERSTAND YOUR ATTITUDE TO RISK
Understanding what sort of risk you can tolerate will determine a major part of your strategy. Lets be straight, investing in property is a significant financial commitment and can have significant affects on an individuals and/or families cash flow. Knowing what is comfortable and what is not will start to help you identify potential investment options that are right for you. This coincides with the previous step and advice around not maxing yourself out. Things such as interest rates, job security and relationships can change so understanding the risk and numbers associated with holding an investment property during a worst case scenario will help you understand what a comfortable purchase price may be. Some people also can't fathom the thought of taking on debt as they believe it will change their lifestyle too much. This is hardly the case if you know your numbers.
If you are still with me and have got this far down the blog, first of all thank you and please know I don't want to scare you off now by using the word budget. The word budget does not excite many people. The word budget is normally associated with the feeling of sacrifice and in most cases sacrificing parts of our lifestyle we enjoy. I have learnt over the years that budget does not necessarily mean stop doing or buying the things we like. Budgeting is just a way to ensure you are balancing and/or managing your incoming and outgoing expenses. It allows you to identify where you're spending your money and more importantly helps you plan for larger expenses or purchases down the track like, I dunno, maybe an investment property!
6. HAVE A PURCHASE PLAN
Having a purchase plan is a major must have for people who want to purchase the right property. What even is a purchase plan and what does a purchase plan need to have? Your purchase plan should facilitate all of the above. It is your go to guide when you are at a stage of selecting a potential property. If the potential property does not meet the criteria's of the plan, keep looking! It should serve as must have list for potential options.
7. KEEP LEARNING
If you were to wait until you learnt absolutely everything about the property market before taking the step to invest, who knows how many years that may take. I am a big fan of education and knowledge especially when it comes to making significant lifestyle decisions. Learn as much as you can but always remember this. When you're at your next social gathering discussing your decision to pursue the investment property path there will always be one or two experts among the group. It is extremely likely your friends and your family will always have your best interest at heart and will offer their advice. As they have had their own experiences and have their own opinions regarding property investment, it is important to remember their goals and their strategy may not be the same as yours. If you take advice from any professional, friend or family member, make sure they understand you, your strategy and what your trying to achieve before implementing their advice.
8. STAY FOCUSED ON THE END RESULT
Unfortunately my report cards throughout my juvenile years did not highlight how important I thought being focused was back then. It has taken years of life, professional and investment experience to now see how important being focused on the end result really is. Investing in property should always be a long term strategy and while we may come across scenarios that can affect or hinder our ultimate goal, the best way to overcome this is; identify the problem, if you can wait for the scenario to pass then ride it out. If you need to change or adjust your strategy engage with the right people to help you assess what is best outcome for you and then implement. But the most important thing to remember is remember why you are doing this and STAY FOCUSED ON THE END RESULT.
If you'd like to book in an appointment to start your property investment journey. Contact us today. You'll get a pre-approved amount that you can borrow and your journey begins with a meeting with Anthony and Alex