A successful property investor is not necessarily made from birth. But if you follow the right steps and methodology, you are more likely to build a successful property portfolio. Here are a few tips to get you started.
A successful property investor is not necessarily made from birth. While there may be individuals who have a natural aptitude for property investment, if you follow the right steps and property methodology, practically anyone can build a well-performing property portfolio. Here are a few pointers to get you started.
Evaluating your finances
Whether an owner-occupied or investment property, buying property requires a certain level of finances. You'll need enough for a deposit, which can be pricey depending on where you buy. SQM research and other guidesshow that the median price for a house in either Sydney or Melbourne is quite high. Add up your income and assets and figure out your expenses to see if you'll be able to afford that, plus the ongoing costs of investment.
Delayed gratification can be a tough mindset to adopt particularly for younger buyers. Just because a saved deposit may seem like a far away goal doesn't mean it's impossible, all it takes is the right mindset. If you have the patience, the ability and willingness to sacrifice, and start making use of compound interest now, it won't take long before you have enough saved for a property.
Creating a strategy
Once you're sure you can afford to invest, it's time to setup a property investment plan for moving forward. DPN can evaluate your financial position and create a personalised strategy with property options tailored to your specific needs. This will also involve some work on your part too, you'll need to work out what your goals are, and the time frame you have for them. You'll also need to establish your attitude to risk - namely, how much you can tolerate.
Carrying out the research
It can't hurt to do your own research and get educated about the property market. Utilise sources like Residex or RP Data to check out relevant statistics, such as median house prices, rents and vacancy rates. Remember that just because the average house price is high in a city doesn't mean it's that way in every area. RP Data last year highlighted the five most affordable suburbs for houses and units in the capitals, such as Wolli Creek and Eastlakes in Sydney.
Doing the preliminaries
Be sure to also carry out an appraisal of any property you consider investing in, to find out how much you could rent it for. You'll also want to have the usual building and pest inspections taken care of, and purchase landlord insurance to protect yourself. You'll also need to have structured your loan in the most advantageous way possible before going through with the purchase - this could save you thousands of dollars in the long run.
Building your portfolio
Finally, once you have your first time property investment, be sure you make use of depreciation and other tax offsets to bring down your taxable income. Over time, as your investment becomes cash flow positive, you will start to build real wealth which you can eventually leverage to buy more property.