Be Part Of The 18% Of Investors Who Own More Than 1 Property
For Australian’s who invest into property, the majority will invest in only one.
A report produced by CoreLogic in 2016 suggested that there are 2.03 million individual investors with an average of 1.28 investment properties per investor. The statistics they presented, from the ATO, estimated that 82% of these investors will own only one in this asset class.
This poses the question then – Why is it that only 18% of them own more than 1 property? How are the minority able to do this?
Of the clients we meet, there are varying reasons as to how and why they are able to invest into multiple properties. There are things outside of their control including market movement, lending policies, economic policies and certain personal circumstances which can play a part both positively and negatively.
But there are some commonalities they have which can help if building a property portfolio is one of your goals. If you consider these prior to making your first or next investment, it may just set you up for the next one:
They have a strategy prior to investing
Having an outline of your own investment strategy is crucial to success. Much like a business needs a business plan, investing needs the same. Your investment strategy should outline your criteria for investing, cash flow projections and so on. It can help you with making decisions on what to invest in or what to pass up. But keep in mind that any investment strategy should be specific to you and your own circumstances and resources.
They do not overcommit on an investment property
Prior to investing, you are likely to get pre-approval from the bank as to the maximum you can borrow. But that doesn’t mean you need to spend to your limit. Using up all your borrowing capacity may end up holding you back in the future. It’s also worth noting that a higher priced investment property doesn’t mean it’s a better investment. All the fundamental criteria still need to be met in order to deem it a good purchase.
If your borrowing power is limited right now, then it’s even more important to establish an investment strategy and following it to ensure you have the opportunity to build on it.
They have control over their debt
One of the main things that hold people back from further investment is their debt levels. This includes home loans, credit cards, car and personal loans. To enable further investing, you must have good control over your debt. That means keeping consumer debt to a minimum and paying down your home loan. Doing this creates equity and it also reduces any un-necessary interest. Putting yourself in a good debt position will allow you to replicate your strategy sooner rather later.
Like with anything in life, preparation and planning ahead can allow you to build your investment portfolio sooner. Those who are able to invest in multiple properties don't always have hgher income or bought at a boom. They followed a strategy, stuck to fundamentals and got the right advice when they needed it. In short, they didn't over complicate it and kept it simple. That's what got them to be part of the 18%.