Purchasing your first investment property is a big step. Suddenly, you've gone from simply being an ordinary home owner to becoming a property investor. But once you're settled in this new role, the question becomes: How do you get to the next one?
No successful real estate investor is satisfied with just one property. Rather, they want to build a portfolio of many properties, all helping to grow long-term wealth. How do you know you're ready, and what can you do to facilitate this next transition?
Check your finances
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First of all, you need to be sure you have the financial wherewithal to expand your property investment ambitions. If your existing asset is a cash flow positive property, you might have saved enough to put a deposit down on your new purchase.
However, for a speedier process, evaluate the capital growth on your property and check if the equity in your property has increased. If so, you can leverage your equity growth, borrowing the money for the new property against this equity.
Review your portfolio
Once you've built a portfolio, it's no good to simply let it sit and assume everything is hunky-dory. It's important to annually review your portfolio and look at performance, growth and the costs of holding the various properties. Be sure to set investment goals, too, and measure your portfolio against these original benchmarks.
Such reviews can help you figure out which of your investments is simply not performing up to scratch, as well as help you find out if the current size of your portfolio lines up with your risk profile and finances.
You should take the opportunity to divest from poorly performing properties. At the same time, be on the lookout for new opportunities that can help replace these properties and further grow your wealth and portfolio. DPN can help you find properties to match your goals and strategy, and advise you on the way forward.