If you’ve been sitting on the sidelines for the last few years watching property values and rents increase, you would have plenty of motivation to take the plunge and become an investor.
But it can be hard to know where to start. There’s a lot more to it than simply buying a property for sale and watching the rental income roll in while the value heads north. There’s so much more to it, in fact, that a lot of would-be investors simply never get started.
If you’re a property rookie, you need help and the good news is that it’s out there. So here are five tips on what you need to do to get cracking and build that portfolio.
1. Think about your goals
B Invested founder Nathan Birch often talks about the importance of starting your journey by selecting an end destination.
Why are you investing in property? What do you want to get out of it?
You need to understand what your ultimate end goal is, so you can work backwards from there and create a roadmap to make it happen.
You might want to accumulate 10 investment properties that pay themselves off and create an intergenerational wealth vehicle for your kids, grandkids and beyond.
Or you might want to create a passive income that allows you to retire from work by a certain age and live off your portfolio.
Consider these things before you get started, as having a plan in place will help you stay focused.
Think of it like a business. You won’t find a successful enterprise that didn’t have a clear plan or strategy in place.
2. Your investment strategy
How are you going to get to your end goal? Do you have a certain amount of money you can use to invest? What will that get you and how can you make sure you are able to use it to leverage into more assets afterwards?
Will you spend 10 years accumulating property, the next 10 years consolidating your portfolio and the following years getting rid of your debt? Or do you plan to invest in 10 properties, wait until they double in value and then sell off five in order to pay down the debt on the others and be left with five unencumbered properties delivering you an income?
3. Invest in help and education
If you’ve never invested before, it can be hard to come up with the above goals and strategies all by yourself. You need professional help in the form of a good accountant, conveyancer or solicitor, and a great buyer’s agent.
These people can help arm you with the education and skills you need to make the right decisions. And the good news is that many of their fees are deductible come tax time.
When choosing professionals to help you, you should check their track records. Have they been in business for a long time? How many clients have they helped? Do they have examples of success stories that they can share and that you can verify through research?
Beware the property spruikers offering one-stop investment shops and outrageously high yields without further information, or through a company name that can’t be easily researched online. If a deal sounds too good to be true, it usually is.
4. Get financially savvy
You can have the world’s best strategy, but you won’t get anywhere if you can’t convince a bank to lend you the money.
It’s important to get in touch with a mortgage broker who can present you with the loan options and products available to you. It’s important that when meeting a broker, you make it clear what you are hoping to achieve with your portfolio. A good broker will then help you put a strategy in place that will ensure you are able to keep borrowing the money you need.
A broker who is inexperienced with multiple property portfolios, or is only focused on the first deal and their commission from the bank, may leave you stuck later down the track.
Zinger is a company that specialises in investment and helping people build double digit portfolios, so reaching out to one of Zinger’s financial strategists would be a good place to start here.
5. Time to take action
With the above points in place, it’s time to get started. When starting out, and indeed throughout your investment journey, you can benefit from keeping Nathan Birch’s three main principles for investing in the front of your mind.
Those are to buy below market value; with upside for value growth and a strong rental return.
Your buyer’s agent can present you with properties that fit your strategy, along with market insights in the locations you invest and the rest of your team of professionals will guide you through the purchasing process.