When it comes to purchasing an investment property and being able to build your property portfolio, strategy is everything. Building a multi-property investment portfolio doesn’t need to take years of saving, waiting, planning and preparation. What it does require is a passion for property investing, a commitment to learning, and a personalised approach to reaching your financial goals.
The hardest investment property along the journey, and the most important property, is your first one. This is why 73% of investors will only ever buy 1 investment. The problem with this is the statistics show that to be able to retire comfortably and have choices in your freedom years, you need to own at least 4 properties (including your own home) when you retire.
But if the first is so hard, how do we manage to purchase a second, third, fourth, and even more properties?
It’s all about setting up the correct strategy at the start of your journey and through carefully selecting your property investments. Unfortunately, there is no one size fits all strategy, and while we would love to give you a magic formula that works for everyone, investing in property is not that simple and every individual requires a slightly different strategy to reach their goals.
So how do you create your own personalised strategy?
1) Finding your why? – Before you even think of investing you need to know what your end goal is and the true reason behind you wanting to start this journey.
Having a clear goal is key to making the entire process successful. Do you want to build wealth for retirement? Pay your mortgage off? Leave a legacy for your children? Build safety to protect your own home? Build a passive income to retire early? Travel? Help set yourself up to buy your first home? Help your kids get their first home? Is it a forced saving plan because you are unable to save a cent and spend every dollar you earn and sometimes more?
2) Getting your finances in order – Here we see the first and most common question. Can I afford it? Without a doubt this is the biggest fear and setback that most people face. Many of you will already own a home with a substantial mortgage. Perhaps it is nearly crippling you as it is? So, how can you afford a second property?
The answer is through sourcing carefully selected properties, understanding tax depreciation, negative gearing and cash flow management. This is where it is essential to have a good team around you who understand how to setup and get the most out of these strategies.
3) Choosing the right property – Once you have your finances in place, the next biggest hurdle to overcome and what many people ask is, how do I choose the right place, the right property, the right developer?
Often people will look to invest in a particular area after hearing about it from a friend or family member. The problem is without the correct research and understanding of the market, costly mistakes are easily made.
You need to understand property cycles and know that in the Australian property market there is always somewhere that will be growing more than another. Through the correct research strategies, you will be able to find these areas and know exactly when the time is right to invest in these areas.
4) The last part of the puzzle is knowing When – When to invest and when to exit are essential to growing your wealth faster. This is often where people get misguided by their friends and family as what worked for them 6-7 years ago won’t necessarily work for you now. The key is to ensure you do the proper research to understand markets and know when the right time to invest is.
If you would like to learn more about these strategies and how you can select your own, then get in touch with us today.