Why ‘practice makes perfect’ in property investment
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Why ‘practice makes perfect’ in property investment

By Bianca Dabu
Damian Collins

Many budding property investors still hesitate to start early in the business of creating wealth through property for fear of making the wrong decisions and ultimately derailing their journey, but the successful ones will tell you that you can never really know everything at once and, as in all ventures, "practice makes perfect".

Braedan, at 23, is looking into starting his property investment journey this year as he finishes his final year in university.

While he is aware that getting a loan from the bank will be hard as he’s only working part-time, the young budding investor is keen to buy his first property as soon as possible – even taking time to research about the different real estate markets in Australia and studying the terms of getting a family loan guarantee.

Should he go for it or just wait until he can get a full-time job and save up on some money?

Smart Property Investments Phil Tarrant and Momentum Wealths managing director Damian Collins share their thoughts on investing early and why property investment takes some good practice to master: 

Whats your first tip for Braedan?

Phil Tarrant: My first tip would be at 23 years old, youve been studying for about five or six years—mate, [I suggest you] go and do some traveling first is what I would say! Go and enjoy yourself. That said, you can have your cake and eat it as well, but youve got to have fun before you do anything. Thats what I did, and its probably the best thing I ever did personally.

Damian Collins: The best thing I did after uni[versity], before I started my accounting career, [is when] I went and traveled around the world for three months and its the last time Ive had three months off. Theres always life ahead, Braedan, and good on you for being positive about it at 23. Its amazing ... [But] you arent going to get a loan. Pure and simple. On your own.

Can he start his investment journey through a family loan guarantee?

Damian Collins: If you are going to invest and youre not going to take our advice and travel, then its a personal question for you and your dad as to whether your dads going to stump up the money. Because effectively, even though he may not loan you any cash, your dads signing his life away for the equity loan. Theyll take a mortgage over your fathers house, and hes more than likely going to have to be an income guarantor as well. Just be careful on that.

What would be the best real estate market in Australia to begin with?

Damian Collins: I think Sydney and Melbourne are probably going to do the best this year, but theyre running out of legs in terms of their cycle, so its not really much point getting into the last five or 10 per cent. In terms of Adelaide, PerthPerth, TAS Perth, WA, and Brisbane, nothing is going to run away this year. Well certainly start to see some improvement in those markets, but youre not going to miss out [on] a huge amount by sitting out for 12 months until you get your own full-time job.

Should Braedan jump in or just wait it out for a while?

Damian Collins: Look, things can change. Who knows where you might end up in terms of career and everything. Good on you, Braedan, for being so keen to get ahead, but I think in your circumstances, Id be just, maybe, sitting out until you get your job. I dont think youre going to miss out on a lot in the next 12 months. When you get your full-time job, get your life set, then have another think about getting back in.

Phil Tarrant: Those inspirational stories that youve heard about of Gen Y, millennials who are sort of bucking the trend and investing in property and doing quite well in – the one observation I would make on that is that the people who are doing that are pretty driven. They’ve really crystallised their strategy, they’ve crystallised what they’re trying to achieve through property investment. And to be fair, most of them are doing without something as well. So if you’re really going to go down that path and start investing in property, you’ve got a chance of getting four, five cycles before you hit retirement. If you can get in, great.

What’s your final advice for young, budding investors?

Phil Tarrant: Dont overexpose yourself. Get some skill sets around money management, understanding how you can service a commitment or having a loan. Practise doing that first before you get into the marketplace – make sure that you can actually do whatever you want to do before you actually want to go and do it. If you can get that right, then you can confidently go and start investing in property. Id go and speak to a good broker and really understand exactly what the requirements are around getting finance.

Tune in to The Smart Property Investment Shows Q&A session to know more about how investors can prepare themselves in the face of interest rate hikes, how buyers can find the right products to suit their needs, and more of Phil and Damians thoughts on some of the most frequently asked questions about property investment.

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Why ‘practice makes perfect’ in property investment
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