1. Get the Right Guidance
Good planning is essential to your financial success. Seeking advice from qualified and established experts in the field means that you have access to their valuable experience and knowledge about what works and what does not. Assembling a good team of property investment professionals ensures that you have the support you need through every step of the process. The first member of your support team should be a Qualified Property Investment Advisor (QPIA). They will know the right formula to follow to ensure your success and will help you apply that formula to your unique set of circumstances. Next, you will need an experienced mortgage broker, licensed buyers agent and a solicitor/conveyancer. You will also need an independent pest and building inspector and a reliable property manager but if you have found a good buyers agent that focus on building a relationship rather than a transaction, they will be able to provide you with some recommendations for a reliable property manager. And finally, to complete your A-Team , you will need a good accountant.
When searching for a team of people that you can trust, always assume yourself in a General Manager position. After all, if you want to build a passive income for life, this is a serious business. Look to see that they have a track record of performance and success and ask for testimonials where necessary. Most property professionals also offer a free consultation so make full use of the time and prepare your own list of questions. During the consultation, listen and observe if the advisor is trying to push you to buy a certain type of property or they are keen to understand your situation first before advising you on anything? One of our pet hates are advisors that try to recommend a one-size-fits-all solution when the fact is, every household is different and unique. Each household should have a property investment strategy that is custom built and tailored to their specific needs. You will want to make sure that your concerns are addressed and that you feel a sense of rapport. Always remember that your team is working for you and you want to make sure you feel confident and comfortable with them from the beginning.
2. Increase Your Borrowing Power
Taking all possible steps to improve your credit and increase the amount of money you can borrow will benefit you greatly. Although some might say you do not need much to start investing in property, a bit more capital never hurts. You can start by consolidating your existing credit debt and decreasing the number of credit lines you have open. As always, saving as much as possible through effective budgeting is an essential part of this process. If you have reached the point where you own more than one property, your borrowing power is enhanced by the rental income. Plus, the more good quality assets you have, the more attractive you are to lenders. Do not worry, however, if you do not own multiple properties. Even if you do not own a single property yet, focus on making your first purchase and then go from there. You might be surprised at how quickly the momentum can build.
3. Set Specific Goals
Putting together a plan to create your ideal property portfolio is a fundamental step. You will be much more likely to achieve your goals once they have been clearly laid out. This is where you will want to have a discussion with a property investment advisor to assess your current finances and examine where you want to go. What kind of specific goals do you want to achieve, and when do you want to achieve them? You will be looking at projections for your future financial needs and using that information to help make decisions right now. It can be beneficial to put your goals into a timeline so that you can plan more effectively. This will also help you gauge your success over time and make changes as necessary. Life is always full of expectancy, so embrace it!
A good QPIA will be able to crunch the numbers for you, analyses and determine the best investment strategy for your circumstances and explain everything in a way that you can understand using graphs and charts. This is really helpful because you will be able to see all the aspects of your portfolio in one place and pinpoint specific times in the future where you would be expecting a negative cash flow and even times when you can quit your day job to reap the benefits of your investments. You might be surprised at how simple this information can be when you have had a professional effectively break it down and present it to you.
4. Do Your Research
Knowledge is empowering. In addition to having solid help from experienced property investment professionals, keeping up to date on market trends is important to make sure that you are able to make informed decisions when the time is right. Read as much as you can about choosing the right property, the loan process, and real estate in your target area so that you will be an educated and savvy buyer. Although you will have the advantage of professional help, the more knowledge you have on your own, the better prepared you will be to navigate your investments over the long haul. At the very least, when the advisor is explaining things such as capital growth, rental yield returns, Lenders Mortgage Insurance, Loan to Value ratios, positively geared property, negatively geared property and so on, you would have an idea on what is at stake and able to validate his advice. Even having a basic understanding on tax law will be beneficial. Although tax information can be difficult to understand, a little basic knowledge goes a long way when it comes to staying informed. It will also help when you are making decisions to renovate or upgrade your investment property.
5. Have Prospective Properties Well Inspected
It goes without saying that any type of asset you purchase should be well built so that it stands the test of time. When it comes to property investment in particular, that becomes even more important. Purchasing property requires significant sums of money, so you want to make sure that your purchase will be as profitable as possible. A good property inspection can reveal safety issues that may make the property unsafe to rent without considerable investment upfront. For all you know, the property might need a complete re-stumping that was not obvious and was not mentioned by the selling agent. These kind of hidden issues can cause significant financial damage to your portfolio. A good and independent pest and building inspector can also help you anticipate future maintenance costs so that you can factor that into your profit projection.
Apart from the actual property, the legislative part of it needs to be thoroughly reviewed as well, preferably by an experienced solicitor or conveyancer. The Contract of Sale is generally created to favor the seller and what many investors fail to realize is that key areas in the contract are actually negotiable. Inexperienced investors often make the mistake of skipping this step only to find out later on that the contract is disadvantageous for them. There are times when important details are hidden between all the law jargon such as ownership titles and building permits. With professional help, you may also learn about legal issues that you would not have known about otherwise.
Finding an inspector and solicitor that you trust is of the utmost importance. Albeit, this means another couple of hundred dollars to spend but would not it be wiser to spend it now rather than losing potentially thousands in the future? You do not want what should have been an asset to turn into a liability because something was missed during the process.
6. Take Action!
Time is of the essence more than ever when it comes to buying real estate. Procrastination is probably your worst nightmare so, making a list ensures you can organize your "plan of attack" and is useful for deciding what to do next. Even if you only accomplish one item per day, you will be that much closer to realizing your ultimate goal of wealth and financial freedom. It can feel overwhelming when you initially think about everything that is involved with property investment. If you can break it down into manageable action steps, you will feel much more confident as you begin the process. A good first step is to schedule a consultation with an investment professional. You will feel assured and confident about moving forward when you have solid help on board at the start.
With the right guidance and information, you can make real estate investment a profitable part of your life and retirement plan. It is definitely one of the best ways to "work smarter, not harder." Keeping these tips in mind will help you navigate the world of investment and create assets that generate income for you even when you are not working. Once you have gotten started with property investment, you will quickly build momentum that will carry you down the road to the financial freedom and independence that you have worked so hard to achieve.