The recent strong growth in property prices across many cities in Australia has no doubt ignited strong interest in property investment.
And you might even be tempted to join the fray. But before you jump in, you need a bit of a reality check to help you prepare and to improve your chances of success.
That’s because a large number of investors are often stuck with their first purchase and unable to build the portfolio they want.
Need proof? Just look at the ATO figures for 2010–11. Of the nearly two million property investors, only one in five owns two properties or more. Even more staggering is the fact that less than 1% own more than six properties.
So how can you ensure you’ll be among the one-percenters?
It all starts by asking yourself the following questions:
1. Do you know what you want to get out of investing?
It goes without saying that if you’re not clear about what you want, you will struggle to get motivated and stay on track. Ask yourself why you want to invest in property. Your ‘why’ is the single biggest factor in helping you succeed.
2. Do you understand the risks of investing in property?
Yes, property investing can make you money. But there are dark sides to becoming a landlord, including vacant properties, cash flow crunch, and falling values. Make sure you understand them fully before diving in. Better yet, make sure you have plans for how to deal with them should they happen.
3. In what timeframe do you want to achieve your goal?
Setting a deadline for when you’d like to achieve your goals gives you a sense of urgency and direction. But make sure the deadline is realistic, otherwise you’ll end up losing motivation.
4. Are you financially ready to invest?
Finance is the lifeblood of investing. It’s simple: no finance, no investment. Before you start thinking about strategy, take stock of what you own and what you owe. Then ask yourself if you can support an investment property with your current financial commitments.
A quick way to gauge whether you’re ready to invest is if you have access to the required deposit and you have the financial resources to hold the property over the long term.
5. Do you know how to manage your budget once you purchase the property?
Buying is the easy part. The challenge is sustaining your investment, paying the mortgage month after month, year after year, until you’re ready to cash out.
Therefore, it’s important that you have the fortitude to manage your cash flow in order to hold your property over the long term. Investors who are unable to maintain a healthy cash flow may be forced to sell and could suffer losses.
6. Do you have people to support you if things get rough?
Needless to say, having supportive people around you will help you deal with the problems you may encounter at some point. It’s important to surround yourself with a group of like-minded people or even a coach to inspire and motivate you when things get a bit hairy.
7. How committed are you to your visions and dreams?
Investing in property is a long-term play. Ask yourself if you’re prepared to do what it takes to hold your property over the long term, despite what the market is doing. Without commitment, you may lack determination and quit halfway.
8. Do you know your exit strategy?
Do you have a plan for how to recoup your investment capital in the worst-case or best-case scenario? It’s important to have a Plan B when things go pear-shaped. It’s equally important to plan when to cash out and enjoy the rewards of your investments.
As you can see, a bit of self-analysis will go a long way in preparing yourself for your investment journey ahead.
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And you might even be tempted to join the fray. But before you jump in, you need a bit of a reality check to help you prepare and to improve your chances of success.
That’s because a large number of investors are often stuck with their first purchase and unable to build the portfolio they want.
Need proof? Just look at the ATO figures for 2010–11. Of the nearly two million property investors, only one in five owns two properties or more. Even more staggering is the fact that less than 1% own more than six properties.
So how can you ensure you’ll be among the one-percenters?
It all starts by asking yourself the following questions:
1. Do you know what you want to get out of investing?
It goes without saying that if you’re not clear about what you want, you will struggle to get motivated and stay on track. Ask yourself why you want to invest in property. Your ‘why’ is the single biggest factor in helping you succeed.
2. Do you understand the risks of investing in property?
Yes, property investing can make you money. But there are dark sides to becoming a landlord, including vacant properties, cash flow crunch, and falling values. Make sure you understand them fully before diving in. Better yet, make sure you have plans for how to deal with them should they happen.
3. In what timeframe do you want to achieve your goal?
Setting a deadline for when you’d like to achieve your goals gives you a sense of urgency and direction. But make sure the deadline is realistic, otherwise you’ll end up losing motivation.
4. Are you financially ready to invest?
Finance is the lifeblood of investing. It’s simple: no finance, no investment. Before you start thinking about strategy, take stock of what you own and what you owe. Then ask yourself if you can support an investment property with your current financial commitments.
A quick way to gauge whether you’re ready to invest is if you have access to the required deposit and you have the financial resources to hold the property over the long term.
5. Do you know how to manage your budget once you purchase the property?
Buying is the easy part. The challenge is sustaining your investment, paying the mortgage month after month, year after year, until you’re ready to cash out.
Therefore, it’s important that you have the fortitude to manage your cash flow in order to hold your property over the long term. Investors who are unable to maintain a healthy cash flow may be forced to sell and could suffer losses.
6. Do you have people to support you if things get rough?
Needless to say, having supportive people around you will help you deal with the problems you may encounter at some point. It’s important to surround yourself with a group of like-minded people or even a coach to inspire and motivate you when things get a bit hairy.
7. How committed are you to your visions and dreams?
Investing in property is a long-term play. Ask yourself if you’re prepared to do what it takes to hold your property over the long term, despite what the market is doing. Without commitment, you may lack determination and quit halfway.
8. Do you know your exit strategy?
Do you have a plan for how to recoup your investment capital in the worst-case or best-case scenario? It’s important to have a Plan B when things go pear-shaped. It’s equally important to plan when to cash out and enjoy the rewards of your investments.
As you can see, a bit of self-analysis will go a long way in preparing yourself for your investment journey ahead.
Follow :
https://www.facebook.com/Valentin.Fritzmann
https://www.facebook.com/OfficialValentinFritzmann
https://twitter.com/ValentinFritzm
https://pinterest.com/valentinfritzma/
http://www.stumbleupon.com/stumbler/ValentinFritzma
http://valentin-fritzmann.blogspot.com/
https://www.youtube.com/c/ValentinFritzmann
https://www.linkedin.com/in/valentinfritzmann
https://plus.google.com/+ValentinFritzmann
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