30 Secrets to becoming a successful property investor
Ever wondered how property investors really become successful? If you think it’s all down to luck and coming from a wealthy family in the first place then you are sadly mistaken. Successful property investors get to where they are through sheer hard work, determination and their ability to take some level of risk, whilst understanding the property market inside out and buying with the facts and not with their heart.
If you are keen to build a property portfolio that will be the envy of others, whilst grow your wealth, then you are in luck as we reveal our 30 secrets to help you become a successful property investor too.
Just remember, you will not become a successful property investor overnight. This path to wealth creation takes time and if you have the patience to see this through then you will reap the rewards in the not so distant future.
30 Secrets to becoming a successful property investor
1) Set goals In order to be successful you need to know what you are trying to achieve. To do this, you need to set goals. Having an end goal in mind gives you something to work towards and gives you the motivation to achieve it, whether this is to retire comfortably or to reduce your working hours. You need to work out exactly what you want, by when and have a plan to get you there.
2) Create a savings plan One of the first things you need to do when investing in property is to create a realistic savings plan. This will help you reach your deposit goals sooner to buy that initial investment property whilst give you an emergency cash buffer to use in case of financial troubles.
3) Get your finance organised Seeing a Mortgage Broker as early as possible is critical to know how much money you can afford to borrow to purchase a property. They will also be able to help you with how you can use your equity to purchase more properties.
4) Take the advice from your investment Property Consultant Your investment property consultant will have their finger on the pulse and are incentivised to make you as much money as possible so you will buy more property from them (ask your Consultant how many repeat buyers they have). Most of the time, our friends and family are not successful property investors and therefore their advice is not based on concrete facts. You should therefore avoid their advice and base your decisions on your research and research from your property consultant.
5) Verify the research Research is key to purchasing the right property in the right location. Successful investors will look at all of the facts and key information and base their decision to buy on this rather than the pretty pictures. Ask your consultation for their research and then verify its authenticity. There’s no point starting from scratch if someone else has already done the hard work for you.
6) Choosing the right team Having the right team on your side can make the whole world of difference. Therefore, it is essential to spend time researching your team and go with reputable people that you can trust. When you have many properties, you might also prefer to have a property manager who can manage your properties for you rather than go down the self-manage route which can be quite time consuming and stressful.
7) Your first home is not your dream home One thing that homebuyers and first home buyers believe is that the first property they buy has to be their dream home in their dream suburb. As an investor, a property you buy should be an investment, and you should not become emotionally attached as this will cloud your judgement.
8) Take advantage of the first home owner grant If you have yet to buy a property, then you might as well take advantage of the first home owner grant and stamp duty savings which comes with buying a brand new property or a property off the plan. In New South Wales, you could be eligible for the $10,000 First Home Owner Grant as well as paying zero stamp duty on home up to $650,000. Many people will live in the property first as a first home buyer and then turn it into an investment property to reap the tax savings.
9) Know what you want and act quickly Being decisive and knowing what you want is essential in the property investing world. You need to be the type of person who can make decisions quickly and stick with them as before you know it the property you had your eye on would have sold. Too much procrastination will often mean you will miss out.
10) Don’t follow the crowd In order to be a successful property investor you need to avoid following the crowd. Instead, you should be a leader and buy when everyone else is selling and sell when everyone else is buying. Also consider buying in an area that no one is yet to buy in which will become the next hotspot.
11) Start as soon as you can – don’t leave it too late Many successful investors get into property investment in their early 20s, if not before. This gives them the most amount of time to grow their property portfolio before life takes over and other things get in the way such as starting a family.
12) Buy close to important amenities Buying property close to important amenities such as public transport, shops, schools and restaurants will make your investment property much more appealing to rent than one in the middle of nowhere, where you have to drive everywhere to reach everything you require.
13) Don’t be afraid of negative gearing/Don’t fear the gear It is a common misconception that any type of debt is a bad and dangerous thing. However, debt is good if used to buy property as it can increase your wealth. However, you need to ensure you only take on the amount of debt that you are comfortable with. Most properties tend to be negatively geared and will involve you being out of pocket, but you should remember that you can claim back tax deductions which can mean your property ends up being cash flow positive.
14) Utilise capital growth The idea is to buy in an area that provides as much capital growth as possible. If you do this earlier on in your portfolio then it will allow you to purchase your next property much sooner.
15) Take out an interest-only loan As a property investor, there is no point in paying off the interest and principal of your loan, as this money can be used much more wisely. This approach means that you are basically throwing good money down the drain. It makes much more financial sense to have an interest-only loan and pay off the interest which leaves more money in your pocket for other expenses. Once you have accumulated numerous properties then you might be in a position to reduce your debt and sell a property in order to own another property outright.
16) Look out for gentrifying suburbs Suburbs that are undergoing gentrification may not be the best place to live in right now, but once gentrified people will be flocking here to live. This means if you spot an up and coming suburb then it is worthwhile investing here as early as possible to generate the highest possible return.
17) Watch out for the ripple effect Look out for suburbs or hotspots that have experienced high growth very quickly such as from gentrification and identify neighbouring suburbs to invest in. Generally if one suburb has experience high growth, then its neighbours will also start to reap in the benefits and price growth next.
18) Hold on to properties for as long as possible The key to building a successful property portfolio is to buy properties and rarely sell them. This is because properties on average tend to double in value every 10 years or so, so it is worthwhile hanging onto these for as long as you possibly can.
19) Buy low, sell high – follow the property clock If possible the best thing you can do is buy property when the market is low and sell when the market is high. Ideally you want to keep hold of your properties for as long as possible, but there might come a time when you do need to sell, so if you can sell at the highest point of the market then you have a greater chance of making a larger profit.
20) Equity is your friend In order to purchase more property you should be utilising equity rather than saving up another deposit. Therefore once you have bought a property which has grown in value, you should tap into the equity to buy your next property and continue this buying cycle.
21) Be prepared for mishaps/ out of the blue expenses No matter how lucky you are in life, there will always be something that goes wrong. If you are prepared for this then you will be in a much better position to deal with the problem in a calm and efficient manner. Perhaps there are unexpected maintenance issues that crops up, or your property remains untenanted for lengthy periods of time. If you have a strategy and plan in place for this then these unexpected costs will not break the bank and you can deal with it immediately.
22) Diversify Your property portfolio should be as diversified as possible to help reduce your risk. Try to buy in different suburbs, interstate and at different price points as well as in different markets. Therefore if one of your properties performs badly, then your other properties will balance this out. Keep in mind the popular saying, “Don’t put all your eggs in one basket”.
23) Be organised Property investors need to be organised, especially if you own a large property portfolio as you will need to keep records of everything associated with your property. It will also make your life easier when it comes to tax time if everything is ordered neatly.
24) Have an exit strategy At some stage you will be looking to sell off your properties, but do you know when this will be? It is therefore important to have an exit strategy when investing in property as it will help to minimise your losses as you will know when you want to sell up.
25) Treat your investments like a business At the end of the day, an investment property acts as a vehicle to get you from A to B and you should treat it like a business transaction. You are purchasing the property to make a sizeable profit.
26) Invest, don’t speculate Investors rely on the facts to make their property decisions whilst speculators buy property in the hope of making large capital gains when they sell.
27) Don’t stop at one or two properties Did you know most property investors only have one or two investment properties under their belt? If you want to retire comfortably then you are likely to need more than two investment properties to become successful.
28) Continue to educate yourself on property investment Ensure you continue to educate yourself on property investment, as things can change overnight. There is plenty of information online which you can utilise and plenty of news and detailed reports to read. Also consider reading books and magazines which provide useful information.
29) Keep an eye out for new opportunities You should not wait for opportunities to come knocking at your door; you should be proactive and constantly be on the lookout for new opportunities.
30) Be passionate about your investments – believe in them When you buy an investment property you need to believe in them and be confident that they will do well. Having a negative attitude or uncertainty will leave you constantly questioning your investment.
Get in Touch If you’re ready to start investing in property, but not entirely sure where you should be investing first, why not speak to one of our friendly Property Consultants who will be able to assist you with your next move, and make sure it’s the right decision for your circumstances.
Call iBuyNew today to find out more on 1300 123 463.
Published on 22nd of November 2018 by Marty Stanowich