Many people would like to purchase property as a kick start for their investment portfolio and decided to get into the game this year.
Observing how prices in the property have been volatile over the years, they are concerned that they will enter the market at the unfavourable timing. Many fear that if they don’t get in now they will never get in at all. So in the end many have not started due to analysis paralysis mentality.
This kind of mentality is a definite way to get oneself into financial downfall. Rather than imprisoned oneself in that circumstance, it is advisable to take some time to lay the foundation and design the investment plan.
Therefore, what would you do first before you plunge into property investing?
What you want out of property investing?
Have you ever heard that phrase that sounded like this? Seneca says it best, “When a man does not know what harbour he is making for, no wind is the right wind”. Before diving into property investing, you should be very clear what are you trying to achieve. Also, by being specific can be very helpful as in it helps in determining the when, where and how much money you want to make out of it.
Evaluate your existing assets and expenses
This part here is pretty straightforward by listing all your possessions, such as your home if you own one, car, jewellery and so on, that you currently own. On top of that, include other financial resources you have to work with, like any other investments if you have any.
Subsequently, do the same with your ongoing expenses. Make a list of all your bills and loan repayments. Acquiring this information at the beginning of your investment journey will assist you benchmark your ability to take on more debt and avoid exhaust your financial capability.
Talk to a mortgage broker
If you are an amateur property investor, having a capable mortgage broker can be very valuable. This is because they have access to a variety of mortgage and property information that you can utilize.
They can assist you in calculating how much you can borrow given your personal and financial situation. Based on the calculation, they can also advise on what type of loan would suit you and how to structure it so you can proceed borrowing money down the road. You may enjoy all the benefits being offered unless you select a broker who understands property investing.
Talk to accountants specialise in property
Many people mistakenly perceive that investing in property is to gain rental income, but they aren’t aware it is also about maintaining cash flow. This is vital, especially if an investor has many units under their property portfolio.
A good accountant will be able to assist you structure your investment property so that you will be able to maximise your tax deductions and cash flow. Additionally, they can help you structure your investments so that you can minimise your tax bills while providing protection for the investment and yourself. Again, choosing a good accountant is very vital.
When deciding what investment strategy to adopt it is crucial to know how much risk you can accept. You can start by assessing your risk profile looking at the following.
•Your age and years remaining until retirement. The closer you are to retirement, the less risk you will likely want to take on because you will not have time on your side to rectify any potential mistakes and you will not want to misspend your retirement funds.
•Your reserves. Do you have some savings just in case you have to use it during an emergency?
•Extra income. Do you have extra income between your job and your property portfolio (and other investments you may have), and how reliable is this income?
•If you are younger and earning a substantial income, then taking on more risk to achieve your long-term goals can be an option.
Educate yourself with the investment jargon and its meaning
Nowadays, with the available information and data widely accessible at our fingertips, it is undeniable we could not educate our self with different aspect of property investing. From online sources such as realestate.com.au by providing us many updated articles about property investing and the property market as a whole. There are also many books and magazines you can read. There is no excuse to why you are not doing your homework in understanding how the market you about to dive into actually works.
Get yourself used to the numbers
You don’t have to be an expert in maths but you need to be comfortable calculating the numbers and analysing each deal. This involves really understanding what the numbers mean and where they are from. It may be challenging to keep abreast at the beginning, but they are fairly easy to grasp once you familiarise yourself with it.
As an investor is very important to have a good strategy to start. It is your road map and should reflect the changing market and your personal circumstances. Avoiding this path and leaping right in may lead to long-term financial ruin. Learning to do right will help you succeed as an investor.
Prepared by Hectarworld.