One of the problems many budding property investors face is determining exactly how to start their journey, but for buyer’s agent Rich Harvey, the first step to creating wealth through property is as simple as knowing one’s personal goals, capabilities, and limitations.
While cash is certainly some of the hard requirements in property investment, according to Rich, there’s neither a staple dollar value nor a secret formula to know whether a person is fully equipped to start his journey of creating wealth. More than the amount of savings, having a good motivation for starting a property investment journey is a better measure of one’s capability to grow and maintain a portfolio.
“It is a case-by-case basis thing because it’s an individual thing. It’s not so much about the number but it’s about getting started,” Rich said.
“You obviously have to qualify for a loan and have some money behind you. You can’t buy property with nothing. You don’t want to leverage 100 per cent. So, you can beg, borrow, but don’t steal. You can borrow off your parents or, certainly, you can use other people’s money, but you do need to get started as soon as possible.”
However, a budding property investor must be careful about being “ultra-motivated” starting on a whim—without acquiring the necessary knowledge and seeking mentorship, which for many are two of the most important keys to success in this venture.
Smart Property Investment’s Phil Tarrant was able to build $2 million in equity after only five years in property investment all while he was overseeing a booming media business and starting a family. Who would have thought that his first property was only worth a little less than $190,000?
“It wasn’t that much cash I needed to put down, but I bought well, bought smartly, and it wasn’t too risky... We did really well out of it, but I’m not going to claim [credit]. Our buyer’s agent said, ‘Get out there. This is the place to be.’ So we went hard really quickly, picked up four properties in, I think, around five months,” he said.
For Rich, starting a property investment journey comes down to one’s diligence and his dedication to doing research about the markets and the factors that could affect their cycles.
“My advice… is research thoroughly, build a team of support, get started early,” he said, “I started myself doing a subdivision—that’s how I got started in property investment. We bought for the first time… we did a subdivision on it. We made fantastic equity by building on the back and then we leveraged off that. That’s the first key to investing: Getting some equity behind you, leveraging off that. That enables you to leap to the next property,” the buyer’s agent concluded.
Tune in to Rich Harvey’s episode on The Smart Property Investment Show to know more about his insights on some of the most frequently asked questions on property investment, including dealing with off-the-plan risks and identifying the best real estate agents to sell your property.