8 Steps to getting started in Property
Admit it , you’ve been thinking about investing in property.
Admit you have read the books, magazines and reports. You have been religiously checking the Real state webpages or Investment Groups for properties.
Yet when push comes to shove, you have stopped for one reason or another.
You are not alone. In fact less than 6% of Australians, or roughly 1.3 million people, own an investment property, even though property is a national past-time.
This is not surprising. A lot of people are overwhelmed by the process and quit before they even begin. But it doesn’t have to be confounding. Reality is, property investing is relatively straightforward.
To help you begin on your journey, here are eight steps for starting a property portfolio on a solid ground, without you losing your mind.
1. Check your Finances
This can be as simple as listing all your assets, including all your incomes and then working out your expenses.
This will give you an idea how much money you have available for investing. Don’t immediately assume that you can’t afford to invest. As long as you have a stable and reasonably good paying job with solid employment history, you should not have a problem getting a loan.
Here to get you started is a budget planner.
2. Get a pre-approval
You can get pre-approval loans through your lender directly or through a mortgage broker. Going through a broker before applying for a pre-approval can be beneficial if you’re not sure you’re financially ready to invest.
Applying for multiple pre-approvals loan is not a good idea. Each time you apply, the lender will check your credit record. If there are multiple inquiries, this sends a red flag to the lender and the lender may refuse your application.
- Find out if you qualify for a loan
- Check your credit rating
- Consider reducing your debt or credit card limit
3. Set your Goals
What are you looking to achieve in investing?
What does success look like to you?
Property investors generally invest in property to secure their financial future or to be free to do what they want, when they want.
In order for you to achieve your goals, you must first articulate what your goals are. More importantly, you need to set a deadline as to when you want to achieve these and then you can work backwards.
For example, if you’re looking to replace your income and retire on your investments within 10 years, you can start by creating a 10-year plan, broking it down further to a 5-yearly, yearly to bi-annual to all the way down to a weekly timeline. This way you don’t get overwhelmed by the enormity of the task.
4. Understand Risk Issues
Your attitude to risk will dictate your risk strategy. What sort of risk level can you accept ?
Getting an understanding of your attitude to risk will help you create a strategy to reflects this.
5. Start a Budget
Budgeting is neither interesting or sexy, but it the only way to ensure that you are able to balance your income and expenses. It allows you to see what and where you have been spending you money and this will help you to plan for bigger expenses further down the line,
6. Create a Purchase Plan
The plan should facilitate your goals of growing your portfolio to a point where it’s producing the growth or income you’re aiming for. The plan should serve as a structure for you to stay in the game of investing.
Here’s an example of a purchase plan you can follow:
- Define your strategy
- Set up your criteria
- Do your research
- Cull your list
- Get appraisal
- Do your due diligence
- Make and offer and negotiate
7. Be Informed
Use the tools that are available to you to make an informed decision. Knowing the market can be key to making the right investment choice.
Being informed also means being wary of get rick quick schemes and property paddlers. If someone is promising you guaranteed returns and overnight riches, walk away; the only person getting rich is them.
There’s no such thing as a property psychic and while there are tried and true methods to research, no one can make guarantees. Understanding your tolerance for risk will help you shape how much you’re willing to take on over the short and longer term period.
8. Stay Focused
Make sure you stay focused. Investing in property is a business decision, not an emotional reaction.
- Be clear about what you want to achieve
- Set a date as to when you want to achieve this goal
- Identify milestones you need to do, to achieve these goals
It’s easy to get overwhelmed when you’re starting something new and as massive as property investing.
But don’t give up. Just imagine in a couple of years time, if you buy the right properties this year, you could be sitting back, feeling happy, secure and even proud that you bought properties that more than doubled their values while your peers and everyone else wishes they’d bought back in the day.