As any successful investor will tell you, while buying your first property can be thrilling, it is only the beginning. To achieve your goals and truly secure your financial future, you need to keep adding to your portfolio. But how do you know that the time for buying a 2nd property has come?
We always say that the best time to buy your next property is whenever you are ready to. As every property investor will move at their own pace, there is no clearly defined timeline for growing a portfolio. However, there are a few key signs that you might be ready to make your next move:
There are a few reasons capital growth is a key focus for property investors. Most significantly, it increases the value of your investment and the amount you would receive if you sold the property. It also increases your stake in the property, which is commonly referred to as equity.
Equity is key when it comes to buying a 2nd property as it can make it easier to secure finance. Specifically, equity can be leveraged for use as a deposit, reducing the need for significant savings. As such, if your first investment property has notably increased in value, it could be time to grow your portfolio.
How much you earn is a major consideration when seeking finance for an investment property. As such, if you are earning more, you will be in a stronger position to buy a 2nd property. This additional income could come from an increase in your salary or the returns you receive from your first investment.
While not absolutely necessary, it also helps to have rebuilt some of your savings after buying your 1st investment property. This will show mortgage providers that you have good financial habits and should make them more willing to lend to you. It will also mean that you have more of a financial buffer to deal with any unexpected costs.
There are no guarantees in investing and some properties simply do not do as well as expected. It can also take time for you to find your feet as an investor and get comfortable with the process. And buying a 2nd property before you are ready will only exacerbate your stress and confusion.
As such, before you add to your portfolio, your first property should be set up and provide steady income. You should also feel in control of your investment and comfortable with the idea of buying a 2nd property.
In addition to you being ready for it, the market also needs to support you to grow your portfolio. This means finding an area where vacancy rates are low, rental yields are strong, and growth forecasts are positive. Obviously, this is something a good Buyers Advocate, like Search Party Property, can help with.
Ideally, you also want interest rates to be affordable and expected to stay that way for at least 3 years. And, if there are government support schemes you can take advantage of (e.g. grants for new builds, etc.), even better.
Whether you are new to investing, or want advice on growing your portfolio, Search Party Property is here to help. Using our Property Portfolio Accelerator model, we can assist you to secure multiple high-performing investments in just a few years. This approach is based on more than two decades of experience and has helped hundreds of investors achieve financial freedom.
For more information on how we can help you achieve your investment goals, book your free Property Investor Assessment session today.