Investing in property is a courageous thing to do. Many people aspire to be investors, not so many actually realise their aspirations.
Those that do successfully invest, seize the moment. They do the research, they run the numbers, they know what they’re getting into and they have a long-term plan for creating wealth. They courageously take a calculated risk, and, based on the information available at the time, they allow logic to override emotion and make a decision to sign the contract.
They’ve taken a leap of faith and become a property investor.
The process leading up to that moment is like a steam train gaining momentum.
The first step is exciting, you’ve made a decision that this is what you want to do, you’re gathering information, talking to people, possibly accessing the knowledge of experts and getting up to speed on your options. Inner-city, suburban or regional? In your local area or elsewhere? Apartment, villa or house? Off the plan, newly completed or older? What are the advantages of each? How much finance can you access? How will you pay the deposit? What’s your timeframe? What do you want to achieve by investing?
So many questions!
But this is where the logic comes in. The primary goal of investing is to create wealth and security. Secondary goals can include minimising tax, diversifying your portfolio or creating a legacy for your kids. Property investing isn’t about finding a home that you love where you can see yourself living in and creating memories with your loved ones.
This is about finding a property in an area that has high rental demand and yield, forecast for strong capital growth. So you need to weigh up your options and decide on the path that works best with your budget, your investing strategy and your goals.
Narrowing down your selection from hundreds of properties to a couple of hot contenders can be overwhelming. How do you know what will give you the best return on your investment? How do you decide on one?
This is why you need to put the work in at the beginning. Have your selection criteria written down and delete the properties that don’t meet the brief. Then go over the others with a fine-tooth comb. Research the area, visit if you can, look at comparable property sales, check out comparable rentals – how many similar properties are available? What are they renting for? What’s the average vacancy period? What are the demographics of the area? Who are your tenants likely to be and what type of home will they want to live in? Make sure you’re looking at the property from a tenant’s point of view as well as an investor’s. If you’re buying off the plan or newly completed, check out the builder and developer. Run the numbers – the projected income and costs.
Look at worst case and best-case scenarios. Make sure you know the cashflow and that you can manage it.
Once you’ve decided on the property that suits your needs, momentum picks right up and things move fast. Really fast sometimes. Within a week you can go from liking a property to exchanging contracts, paying the deposit and arranging finance.
That’s where the nerves start and the courage steps in – or fear takes over.
Do you take the leap, achieve your goal, grasp the opportunity and sign that contract? Or do you stop, question your decision, delay and miss the opportunity?
Courage doesn’t need to appear unless fear has raised its head. Listen to the fear, but don’t be paralysed by it.
If you’ve done your homework and your due diligence, you should be able to put the fear to bed. If not, you need to gather more information, slow down that speeding train and make the decision that’s right for your future.
If you miss the opportunity, will you regret it? If not, that’s a good decision.
If you will regret it, think again, summon that courage and make it happen.
Be courageous, achieve that dream and become a property investor. Your future self will thank you!