January 03, 2017
This is the year you become a property investor! Here are some key things to focus on when setting your goals.
1. The best way to establish clear and achievable goals is to reverse engineer your long term goals. Start with the next 10 years, where do you want to be in terms of wealth? Work your way back to 2017. Always make cash flow your ultimate milestone and goal.
2. Run your investment goals like a business, don't focus on negative gearing strategies, 99% of the time, you want to be making money and be in a cash positive scenario. The total number of properties you own should not be your ultimate goal, rather the focus should be on capital gains (wealth) and positive cash flow (yield) from your portfolio.
3. Fake it till you make it! Who is a property investor? Someone who invests in property! There is no typical sort of person who is an investor. However their main commonality is that they are goal oriented and motivated. Don't wait till you are more educated, get your hands dirty and get in the market now.
4. Seek some advise and start investing and educate yourself as you go. Build a strong network of experienced property investors, advisers and like-minded individuals, so you don't have to re-create the wheel and this will make your journey easier.
3. Be open to all sorts of investment options:
- Don't rule out properties in so-called "lower socia-economic areas". These properties could provide lower cost to hold the property and increased gains in property value. This is usually due to the fact that infrastructure follows population growth and leads to a new booming suburb.
- Units should also not be overlooked, they are usually a great option for yield and gain as they are located close to most hubs (shopping, transport, schools etc) the thing to consider is to make sure the strata levy's are low as high levies will eat into your cash-flow.
- Lastly, don't buy based on tax benefits (depreciation or Negative Gearing) get in the mindset that positive cash flow is king and tax benefits are just a bonus.
4. Change the "Set and Forget" mindset. This is your business and the more efficiently you run it, the more successful it will be. If you can pay for professionals to manage your properties, however monitor the following closely:
- interest rates
- maintenance fees
- portfolio value
- insurance coverage
- cash flow and rent
Remember, your ultimate goal should be to be in a debt free property ownership position, enabling you to replace your income. You can achieve this by making sure you balance the asset wealth as well as your cash flow over the years as you grow your portfolio. Good strategy would be to buy a property that will increase in value in time and doesn't cost you much to hold it.