Investing is a choice many people make in the hope of bringing wealth to their lives. Whilst there are many investment alternatives, property investment tends to be viewed as one of the safest and easiest options.
Get smart about your Investment Portfolio
If you are new to the property investment scene you probably have a lot of questions on where to start!
Buying an investment property can be an overwhelming decision. This blog is here to provide some sound advice on how to start and grow your investment portfolio.
To help you begin your investment journey, here’s some valuable steps to starting a property portfolio.
1. Money, Money Money
The very first step to the investment process is checking your finances…
Now this sounds scary but it can be as simple as listing all of your assets, your income and your expenses. This will give you an idea if you are in a position financially to start investing and also how much you can afford to invest.
A crucial factor when considering investing in property is a stable job with regular income and a solid employment history; this is the first thing lenders will look at when going for a loan.
2. Pre-Approval
Now you have assessed your situation and feel you are in a position where you would like to invest, you now can seek pre-approval.
You can get pre-approval directly through your lender or you can go through a mortgage broker. Going through a broker can be beneficial if your not sure if your financially ready to invest.
Top tips
- Find out if you qualify for a loan – There are heaps of great loan calculators on banking websites, play around with these before you go for your pre-approval. This will give you a good idea on if you qualify, for how much and what your repayments may be. This is a link to the ANZ calculator
- Don’t apply for multiple pre-approvals – Each application for pre-approval is recorded and multiple inquires may send red flags to the lender potentially resulting in the refusal of your application.
- Check your credit rating – Consider reducing your debt or credit card limit before applying for pre-approval.
3. Set YOUR Goals
What do you want to achieve by investing? Are you looking for gain at tax time? Do you want to secure a financial future? Do you want to retire on your investment? Do you want a strong investment portfolio?
In order for you to achieve your goals, you must first establish what your goals are and what the end results look like. More importantly, you need to set a deadline as to when you want to achieve these. Then you can work backwards.
For example, if you’re looking to retire on your investments within 10 years, you can start by creating a 10-year plan, broken all the way down to a weekly timeline.
Remember, investing in property is not a short term cash-cow, it is a long term investment. Take take to analyse your investment portfolio.
4. Budget!
We all know budgeting is BORING!!! But budgeting is the only way to ensure you’re able to manage your income and expenses
It helps you see where your money is going and allows your to plan for any upcoming expenses.
There is great budgeting tools available online such as Money Smarts Budget Planner.
It is important to set up your budget before you start looking for a property!
5. What’s your Plan?
Investing in property involves much more planning then just browsing the market… You need to make a purchase plan based on your goals. For example:
- What is your strategy?
- What are your criteria?
- Where is your desired location?
- Who is your tenant market?
- Make an offer and negotiate!
6. Do the research!
You need to do plenty of research to make an informed decision. Knowing the market where you intent to invest can be key to making the right investment decision.
Also be wary of get rich quick schemes and property peddlers. 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 or investment psychics 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 shorter and longer term.
7. Stay focused!
Investing in property is a business decision, not an emotional reaction!
By following the above steps and being clear about your goals, what you want to achieve and setting achievable milestones you will reduce the risk of becoming overwhelmed.
Stay focused, in 10 years time you could be kicking back, feeling happy knowing that your investment paid off! And if you want assistance managing your investment property, we’re here to help.