In our experience, there is quite a strong sense of camaraderie between property investors. While we may compete for individual properties, we encourage other investors and are happy to see them succeed. Most successful property investors are also very willing to share their insight, particularly with those just starting their investment journey.
Here we share some of the best advice we have seen professional property investors share.
Top tips from experienced property investors
- Start with a clear strategy: It cannot be overstated how important it is to have a structured approach to your investments. You should know the locations you will look in, the type of properties you will target, and how often you will buy. And you should decide all of this before you begin searching for your first investment property.
- Be clear about your budget: It should go without saying, but too many investors start their search without knowing how much they have to spend. This almost always leads to overspending and can cost you significantly if you cannot afford to maintain the property. Also, remember you do not need to spend your whole budget – in fact, it is better to have something leftover.
- Make sure you run the numbers: An important part of doing your research is making sure the financials stack up on any property you are considering. This includes looking at the ongoing costs and making sure that you will actually achieve the returns you are after. And, if you are struggling to choose between a couple of properties, use the numbers to break the tie.
- Look for liveability and renter appeal: When looking at investment properties, it is worth regularly reminding yourself that you will not be living there. As such, it does not matter if the location does not suit you or you do not like the styling. Instead, make sure you understand who is looking for rentals in the area and put yourself in their shoes.
- Be sceptical of negative gearing: While negative gearing may get the most media attention, it is not the right strategy for everyone. In fact, unless you already earn a very high income, negative gearing probably will not be the best approach for you. Also, you will usually be able to grow your portfolio quicker when your properties are positively geared.
- Flipping rarely works: Despite what you have seen on TV, flipping is not an easy way to make quick money. It generally only works if you are an experienced tradesperson, and you can do most of the renovation work yourself. And, even then, you will usually lose a big chunk of your profits to Capital Gains Tax.
- Find a good property manager: When you first start out, you might be tempted to try to save money by managing your properties yourself. However, you will quickly learn that property management can be extremely stressful and time consuming, particularly when you have multiple properties. So, while engaging a professional property manager will eat into your returns, it will also be worth every cent.
- Aim to grow your portfolio quickly, but responsibly: The vast majority of investors only have one or two properties in their portfolio. While there may be many reasons for this, it often comes back to them lacking a growth mentality. So, if you have big investment goals, make sure you also have a clear plan for keeping your portfolio growing.
- Surround yourself with experts and trust their advice: Behind every great property investor is a team of highly skilled professionals pushing them through every step. From mortgage brokers and buyers agents to solicitors and accountants, there are plenty of people who can support your investment journey. And having a good team around you will mean you have people to bounce ideas off and keep you accountable.
- When in doubt, refer back to your investment strategy: Every decision you make should be guided by your investment strategy. So, if you are not sure which option to pick or what step to take next, refer to your strategy. Also, make sure you regularly revisit your strategy and update it as your situation changes and investments grow.
Want to discuss this further?
Whether you are new to property investing or looking to improve your knowledge and skills, Search Party Property can help. We have learnt a lot over our 20+ years in industry and are always happy to share our insight. Contact us today to talk to one of our experienced team and arrange your free property investment assessment session.