Be Part Of The 28% Of Investors Who Own More Than 1 Property
For Australians who invest in property, the majority will only ever invest in only.
Taxation statistics produced by the ATO in 2017 revealed that there are over 2.1 million individual investors in Australia. From the statistics they presented approximately 72% of these investors will own only one in this asset class.
Individuals who own 2 properties make up 18.9% of investors and those owning 3 falls sharply down to 5.8%. Even fewer investors will own more than 3 investment properties.
This poses the question then – Why is it that only 28% of investors own more than 1 property? Why is it that only 18.9% will get past their first one and owning two? 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 purchase multiple properties.
While there are things outside of their control including market movement, lending and economic policies and certain personal circumstances which can play a part both positively and negatively, there are some commonalities which can help if building a property portfolio is one of your goals.
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 investment.
If your borrowing power is limited right now, then it’s even more important to establish an investment strategy and follow that to ensure you have the opportunity to build on it.
- They had control over their debt
One of the main things which 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.
Like with anything in life, preparation and planning ahead can allow you to build your investment portfolio sooner and be part of the 28% of investors who invest in more than 1 property.