5 Ways To Climb Your Way To Owning Multiple Properties
Investing in property is one of the top ways Australians choose to build their wealth. Residential investments in Australia account for 35% of all housing finance. However, building a sizable property investment portfolio does not happen overnight. If your aim is to own more than one property, then these five tips will get you started on climbing the property ladder.
1. One property at a time
Investing in property costs a lot of money. After doing your market on a property that is situated in a good growth area that has promising projectiles for your properties value, you focus on closing on the sale. But to do this you need to have your finances ready.
Bill Tsouvalas, CEO of Savvy advises that “though housing prices are climbing in most capital cities, you must save as much as possible for a home deposit. To make life easier, you should come up with at least a 20% deposit. Higher, of course, is better. This gives your lender a higher loan to-value. The higher this ratio, the less risk your lender is taking on.” Although the idea is to own more than one, it will be in your best interest to focus on investing in one property and nurture it until it is able to sustain itself before you move on.
2. Focus on what you can afford
Being financially prepared requires a sober mind, which means knowing your financial limits. It is every investor’s dream to generate a sizeable income from their property but investing in a property that is not within your financial reach can easily bankrupt you. When purchasing a property ask yourself if you are still going to be able to afford it should the interest rate increase by 1% 0r 2%. Furthermore, will you be able to sustain it should the market experience a slump?
3. What’s the plan?
“If you fail to plan you are planning to fail.” It is as simple as that. Without having a set strategy or purpose it will be easy to waste your finances while you are going nowhere slowly. If you are planning to live off your investment property you need a plan to get that in action. If you want to live off your rental income from your property you need to have a plan in place to do this. What plans do you have in place when your portfolio starts increasing in value, and how do you plan to run everything financially without going bankrupt?
4. Look at what you can grow
Looking at what you can grow boils down to point number four. Investment property portfolios have a lot of areas that you can develop and grow to generate a steady cash flow to help you invest in more property. You can look at things such as renovations that add value to your property, investing in capital growth areas, developing your existing properties and so on. The reverse side of the coin also works where you can look at things that you need to let go. Keep in mind that if it doesn’t add value, count your loses, and let it go before it costs you more.
5. Create a network
When building a successful property investment portfolio, you need a network of trusted professionals who can advise you and direct you into making informed decisions on what to do next. These are your accountants, brokers, property manager, evaluators and more. There are some things that are best left to the professional and skimping on this can have some major financial repercussions. It is important that you start off small and slowly build from there. If you fail, don’t give up. Although mistakes, in this case, can be costly, you can always learn from it and move on to regenerate more money. You need to evaluate the risks that come with starting a portfolio and slowly build.