More Australians want to join the ranks of over 2 million people investing in property across the country’s states and territories. What does it take to begin a property investment journey the Great Southern Land?
Only about less than one per cent of all property investors in Australia have more than six assets in their portfolio, mainly due to committing financial mistakes during their first purchase.
According to Right Property Group’s Steve Waters, it’s important for budding investors to pay attention to their financial footprint and consider it as a significant influencer of their investment decisions from the very beginning.
Is your job stable enough? How much are you earning? Are you with another person in the household? If so, what’s the combined household income? Do you have kids? Ageing parents you need to look after? How much are your savings? How much are you spending? Do you have debt? How much deposit can you pay?
These are only some of the questions you need to ask yourself before buying your first property.
Depending on all these factors, you can determine where to invest, which type of asset to invest in, which type of home loan and loan features can help you maximise your earning potential and your overall investment strategy.
For example: Your stable job provides you $75,000 a year. With two people in your household, the combined income amounts to $150,000. Your expenses are reasonable and you don’t have too much debt. You don’t have kids nor ageing parents to look after. Finally, you can shell out $60,000 for deposit.
Mr Waters said: “Depending on the overland resources, I'd be looking for something that's going to generate a better-than-average growth. I might have to do a bit of a renovation because my capital's limited.”
“If cash flow is not a problem, I would be looking for something that needs work in, perhaps, Brisbane.
“It's largely because we've got limited capital to begin with. You won't be able to buy a substantial property here in Sydney with a $60,000-capital,” he highlighted
At the end of the day, every investor is different and there’s no one formula to success in the wealth-creation venture.
Mr Waters strongly advised everyone who seeks to climb up the property ladder to research thoroughly and do their due diligence in order to achieve their financial goals.
Starting a property investment journey will be more than saving up for deposit and looking for the most beautiful house across your home. Every portfolio should be tailored to the goals, capabilities and limitations of the investor, according to Mr Waters.
There will be multiple investment strategies to choose from once you’ve decided to enter the real estate industry, but there’s no one totally right or totally wrong strategy.
Mr Waters encouraged investors to sit down, preferably with property experts or professionals, and map out a plan based on their short-, medium- and long-term goals as well as their current financial situation and possible future.
He said: “We look to design a decade. That's the easiest way to look at what can you do and how you can do it very comfortably and very strategically and safely.
“You’re not just buying a property. You’re buying towards a goal and you’re buying it safely, so if things were to change in your life, such as in addition to the family or changing employment, you don't have to put the reset button on and sell the property,” the property expert concluded.
Tune in to the August episode of Investing Insights with Right Property Group to know more about starting a property investment venture and ultimately succeeding in wealth-creation.