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Property Investors

Let’s look at the basic of investing in property and all the information you need to know before buying your first investment property.

Begin with the end in mind

Figuring out what you’re trying to achieve and be clear with your goals and objectives.

Starting with the end in mind will greatly improve your chances of achieving your financial goals when you are planning to start investing in property.

It’s safe to assume that most property investors did not start their investing journey with the goal of just owning 1 investment property. However, if you look at the data below, that is actually the result for most investors.

This is because they started this process without a clear goal in mind rather, it was an exercise of ticking a box or to fit in with the crowd, keeping up with the Jones’.

What you need to think about and educate yourself throughly on is what is the end game for your property investment journey or what is the final outcome you wish to achieve.

This could be income replacement, which is earning enough money from the rental income of your properties so you can choose to work less or not at all.

Another goal could be using investment properties as a vehicle to pay off your owner occupied home loan as soon as possible. This can be done by selling the investment property years later and using the profits you’ve made to pay out or pay down your current home loan.

Some people have a goal of aquiring properties for capital growth and selling down on those properties and use the profit to fund their retirement and draw down as a source of income to supplement their lifestyle.

Having this clarity will ensure you taking the right steps towards achieving your goal from day one. Most people don’t realise that the most important asset or resource in property investing or any investing for that matter is not actually the money or the property, but it is the asset of time. You cannot buy time, so every mistake that sets you back a step instead of moving you forward, can be undone.

Currently, according to data from the ABS this is how many properties investors own:

71.48% own 1 investment property

18.86% own 2 investment properties

5.81% own 3 investment properties

2.11% own 4 investment properties

0.87% own 5 investment properties

0.89% own 6 or more investment properties

Immerse yourself in education

Thanks to the internet and advances in technology, there is actually no hurdle to obtaining knowledge and education anymore – regardless of who you are and where you come from.

It is very important to educate yourself on at least the basic of property investing so that you can use this knowledge to decide what your goals are going to be and what is the best way to help you achieve these goals.

Although you can conveniently outsource this process to professionals, such as an investment property buyer’s agent, a financial planner, your accountant, a mortgage broker etc. You must educate yourself to the degree that you are equipped to determine who is the best person to speak to, what is best course of action for you and what is the best way to realise your goals in the shortest amount of time.

In addition to this, property investing is as much about understanding finance as it is about picking the right type of property in the right area at the right time to buy. If you don’t have a good understanding of how finance works in property investing, you will end up making costly mistakes that will ultimately affect your ability to arrive at your destination.

Do your own research

I cannot stress enough how important this aspect of the process is. Your ability to critically analyse the information you’re being presented, whether that is from the real estate agent selling the property or your accountant or buyers agent – it is paramound you critically analyse the information to ensure it makes sense, suits your situation and is logical.

Whenever you are receiving advice, you need to ask yourself:

Is this recommendation based on my situation and goals?

Is there any conflict of interest in the advice I’m receiving?

Does the information make sense?

What if it doesn’t work out?

What risks are involved in this?

Does this advice fit with my risk profile?

Should I get a second opinion on this?

Just because someone has a particular job title does not instantly make them an expert so make sure you fact check the information you’re being provided.

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