Top 5 Pieces Of Advice For New Investors
Becoming a successful property investor is like running a business. It requires planning, savvy decisions and a level headed approach. If you’re looking to start out as a property investor, here are five pieces of advice to keep in mind.
1. Have a strategy
Businesses aren’t successful if they don’t have a business plan in place, the same goes for property investment. You won’t be successful unless you have clarity on your goals. A good strategy and a roadmap make it easier to understand what you need to do to get to where you need to be.
2. Leave the emotion aside
Some people get emotional when investing. They want to buy a place because it looks nice, or they don’t want to buy one that they wouldn’t live in. Understanding you’ve got to run your investment portfolio like a business and treat it like one, make sure it’s logical decisions that you’re making. You’re not going to be living there after all, so it’s about whether the numbers stack up. Is it going to perform a task that aligns with your goals? If it is, add it to the portfolio. If it’s not going to help you get where you want to be, don’t do the deal.
3. Satisfy the fundamentals
There are three things to look at when buying a property. First, buy below market value, so if something goes wrong you have a buffer already built in. If you need to sell it you can get out unscathed. Second, make sure it’s got an upside for capital growth, because you want to see capital growth throughout your property portfolio. Finally, make sure it has strong positive cashflow, so it’s wiping its own nose and has its own heart, lungs, respiratory system and can look after itself. If you didn’t have a job, you wouldn’t want to be stuck having to support all your properties. The cashflow needs to be strong.
4. Get the right knowledge and education
Some people go and start buying properties without doing enough research, or getting education in the investment space. You need to start by understanding how everything works. How does finance work? How does legal work? How does the management of the asset work? What is the difference between different types of property? Some people say it must be a house, or it must be a duplex, or made of brick, or in a certain location, without looking at how everything fits into the big picture.
So if you have clarity with your goals, you know what you’re doing to achieve those goals and you’re buying in line with that strategy, the right education is really important.
If you don’t take that time to do your research, you are likely to fall victim to your emotions. If you haven’t identified and understood the three fundamental criteria from Point 3, you’ll miss out on meeting them.
5. Take action
If you have plans and dreams, you don’t want to get to the end of your life without achieving them.
This happens to a lot of people because they are too afraid to take action. So if you have a great strategy and understand what you need to do, plus you’ve got no emotion in your way, taking action is crucial.
People come to Binvested saying ‘I knew what I should have done 10 years ago but I didn’t take action’.
Ten years is a long time in property, when you could have been building your asset base up. Building wealth through property is not an overnight thing. You can’t get rich quickly in property. Making sure you’ve got the right foundations is very important.
If you need help with any of the five steps above, or just getting started, reach out to b Invested, we’re here to help.