Slick reality TV shows might make property investing look glamorous and exciting, but if you listen to the experts, the reality is really much more nuts and bolts, almost boring in a way! However for those with good staying power who are willing to go the distance to attain wealth creation in Sydney, Brisbane, Melbourne, Adelaide or Perth – the rewards can be pretty awesome. The main point is not to expect the rewards overnight.
So what are the steps to successful property investing? Well, while there are no magic formulas, there are some sound principles to follow.
Property investing principles
1. Good planning: start by knowing what you want to achieve
It’s not enough to simply buy a property and hope for the best. Just as in business, you need to have a sound plan.
You can plan by looking ahead several years and determining where you want to be by then. This then enables you to formulate a set of strategies for getting there and achieving your financial goals.
The important thing here of course is to be realistic – make sure your goals are in line with reality and that they are attainable.
2. Research: do lots of it!
Some TV shows depict people falling in love with a property, buying it, doing it up, and making a killing – simple. The trouble with this is that you only see the successful ones – you don’t get to see those that lost a packet along the way!
Successful property investing involves plenty of research and rational thinking. Your research should cover the history and track record of the property itself (unless it’s brand new), and capital growth patterns in the area, along with yields and tenancy / vacancy patterns. It’s also important to take the time to get to really know the market and its cyclical nature.
By doing your due diligence in this way, you are perhaps more likely avoid the chance of your emotions being in the driver’s seat, and you will be better placed to make rational decisions that are in your best long-term interest.
3. Money: make sure you understand it!
Be prepared to put in the effort to grasp the financial side of things. This includes understanding such matters as your borrowing capacity, the use of equity to build a property portfolio, how to refinance, how to avoid over-capitalising, and getting to grips with the taxation side of it all. You also need to consider the possibility of interest rate rises, and understand the importance of having a cash buffer in place for lean times and slumps, such as when your rental properties are vacant or the market is slow.
4. Don’t go it alone: obtain sound property investment advice in Sydney, Brisbane, Melbourne, Adelaide, Perth
You need to surround yourself with expert professional advisers, which might mean getting a good lawyer, finance broker, and property investment consultant. Make sure the advice you get is independent, and not linked to any particular property.
5. Regularly review: track performance
Simply investing in properties without tracking how they’re performing is not likely to help you achieve your goals. You should review your portfolio regularly so you can make ongoing sound decisions, such as knowing when it might be time to sell a property, when to refinance in order to buy another property and so on. It’s also important to review your rents to make sure they are in line with the market and to ensure your properties are filled with good paying tenants.
6. Be patient: growth can be slow
When it comes to property investments, patience is a virtue – there really are no successful overnight get-rich-quick schemes. You may need to wait several cycles before you see results, so be willing to go the distance!
There is much more to property investing than the above of course. At Chan & Naylor, our investment advisers and personal tax accountants in Sydney, Brisbane, Melbourne, Adelaide or Perth can help you develop a sound investment strategy to achieve your wealth creation goals.
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