How Do I Start Investing In Property? - September 2020
September 9, 2020 / Written by Rich Harvey
Lockdowns. Global instability. Economic turmoil. The uncertainty of the past several months has given many of us cause to reflect on our long-term financial security.
One thing has become increasingly clear – if you want to build your wealth, you’ve got to take matters into your own hands. Security won’t simply land in your lap.
And property investing remains one of the soundest long-term vehicles for financial wellbeing. That remains true even amidst the COVID-19 pandemic, with real estate markets showing their resilience.
But if you’re considering investing in property for the first time, where do you begin?
Fear is your worst enemy
Property investment is exciting. From building a sense of your goals to finding the right house or unit to help make it happen, it can be a rewarding experience.
But getting your start can be daunting. There’s so much to take into account and, if you’re not careful, plenty of pitfalls and traps that can cost you a pretty penny.
In my experience, working with thousands of clients to secure them the best possible property in an area with the strongest future prospects, there’s one major obstacle that needs to be overcome before any other.
The fear of making a mistake is toxic. It can induce procrastination and leave some completely paralysed, unable to ever take a step forward in their investment journey.
Yes, the stakes are high. And yes, there are missteps that you can make. But isn’t that true with any big life choice?
The good news is that you can reduce your risks by educating yourself as much as possible. Begin your journey in becoming an expert on real estate by reading books, blogs, industry analysis and forums. Understand what makes real estate markets tick and start acquainting yourself with the wealth of data that’s out there.
There’s much more to immerse yourself in than a reality television renovation competition!
Another way of reducing your risks and shaking off that fear is by clearly defining what it is you want to achieve.
Why are you considering property investment as a wealth-creation vehicle?
Perhaps it’s the pursuit of financial security, as I mentioned. We all want to ensure that us and our families won’t have to suddenly worry about money one day. Chosen well, property can help you achieve this.
Or maybe you just want to build your wealth so you can truly enjoy life sooner rather than later. Maybe you like the idea of one day being able to work less and live more. Perhaps you’d rather produce your own income, rather than slogging it out for someone else.
Thinking about your goals is a good way of narrowing your focus and getting a step closer to putting your first foot on the ladder. But getting there won’t be simple – especially if you’re trying to do it on your own.
Start with the first step – Money management
One of the first steps to start on your investment journey is learning the language of money. Start by saving more than you earn. Simple right – but harder to put into practice.
Start by creating a personal budget and sticking to it. Part of that budget should be savings goal for your first property deposit. That’s the first step to getting on the property ladder. Keeping track of your spending is critical to your success as if you don’t spend your money of property, you’ll probably spend it on something else! This is where the tough decisions must be made - how to allocate the scarce amount of money you have to the highest and best use.
The best thing about property is that once you get on the property ladder and have some equity behind you, then the leverage you get from property is amazing.
Your team of experts
Second-guessing every little decision, you make because you’re fearful of getting it wrong can leave you stuck. But that doesn’t mean you shouldn’t carefully consider your options.
That’s where a team of qualified and experienced experts comes in, to help guide you through the process, which can be complicated and confusing at times.
Every successful person in the world has surrounded themselves with people who have knowledge and skill sets they don’t. They know that to achieve something, you need a team to give you the best shot at success.
They seek out properties that can make those goals a reality, by putting to work their intimate on-the-ground knowledge of suburbs and finding opportunities within them that have good long-term growth prospects.
They work their network of contacts to secure deals that often don’t reach the market, negotiate with the seller on your behalf and get you the best possible price.
You should also talk to an experience mortgage broker about finance. They’ll examine your strengths and limitations as a prospective borrower and advise you on what to expect from the mortgage process. You’ll get a sense of what you can borrow, but more importantly, what you can afford.
From there, they’ll help you with the pre-approval application and eventually, the mortgage approval.
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