Property investing has nothing to do with luck!
Be honest, you always hear about the rags to riches stories. The media absolutely loves them. Previously, I was guilty of thinking to myself ‘some people get all the luck’. Especially when it come to property.
However, what I have learned is that there is a significant amount of work, careful planning, market research and calculated risk assessments. Consistently is the time that is dedicated, being successful in property investing takes a lot of hard work, and nothing happens overnight! There’s no such thing as an overnight success…
If property investing were as simple, everyone would be a millionaire
Having a solid strategy, patience and a focused mindset is important. It is not easy, if it was, we would all be retired counting our millions. To most people, it falls in the too hard basket. They have only got a property portfolio because they got help, or were lucky’. Though, for most people, investing in property is well within reach, you can get started for as little as $30,000.
Lack of property-centric knowledge can be dangerous
Good savers are bad spenders! You have toiled away at your savings and now it is getting to crunch time where you are about to invest those hard-earned dollars in a property. Investing in any specialised advice feels ridiculous as you have worked so hard to save and want to be very cautious of where it is spent. Many people make this mistake. They try and listen to off handed, uneducated advice from family and friends and then it goes horribly wrong. Property investing is pure strategy. Don’t take advice from the wrong people.
Understanding property cycles and where to invest
At Strike we make a point of knowing the market inside and out. Whilst we don’t have a crystal ball, we can anticipate upturns and downturns reasonably well and which markets can sustain themselves. It’s important to choose a target location with three things in mind:
- Population – when population grows in excess of how quickly dwellings can be created, there will be a shortage in housing to be purchased or leased (supply & demand imbalance).
- Infrastructure – ever wonder why infrastructure spend tends to focus on densely populated CBD’s? New infrastructure will pop up where there is current and future population growth expected.
- Lifestyle – Once key infrastructure is in place, the lifestyle elements of the economy kicks in. You’ll see coffee shops, gyms and other facilities evolve in the area.
Rental yield & capital growth
Your goals and retirement horizon will drive if you are purchasing high growth properties or cash flow properties. As you build your portfolio its important to see how your investment properties complement each other. Having a strong capital growth property may be complemented by a strong cash flow property. It’s important to know and understand your strategy and what the end state is.
Typically, capital growth properties may have a higher purchase price and a negative cash flow. Properties with high rental returns will generate an immediate income from the rental income that will cover your property related expenses.
Regardless of your financial goals, your overall strategy and what criteria you need to take into account when choosing your first or next property, you need to ensure that your purchase is not counterproductive to the growth and success of your portfolio. The key is to start by getting advice from qualified professionals who can walk you through the process, educate you and help mentor your every step of the way.