Many successful investors have started out in property investing at a young age.
However as the Chinese proverb goes: “The best time to plant a tree was 20 years ago. The second best time is now.” You are never too late to begin investing in property.
Here are 8 essential tips for those that are beginning their journey in property investing. It can be difficult when first starting out, there are several challenges and obstacles to overcome.
By the far the greatest obstacle can be coming up with a deposit to purchase your first property. It can be difficult in saving money for a deposit and covering the stamp duty and government fees on the purchase price.
Below are the 8 essential tips that can help first time investors to tackle these challenges and make wiser property investment decisions.
1. Save now and sacrifice now to gain more in the future
Consider budgeting and saving 10% of your salary or wage as you receive it. Set up an auto direct debit from your everyday account to a high interest saving online account. You will not feel 10% missing every week/month if it is automatically transferred.
Try to get a side job to earn more whilst spending less than you earn. You could also:
– Live with your parents
– House share with friends
– Drive for UberX
– Cook at home instead of eating out at work
2. Find yourself a good Mortgage Broker
A good mortgage broker can analyse your situation, work out your borrowing power and help you reach your goals sooner. They can assist in the financial process of purchasing the investment property and educate you on what is required to obtain a loan approval, ie. Genuine savings and maximum LVR allowed on a loan.
Mortgage brokers are usually a free service that obtain their commissions from the bank/lenders that they submit your application too. It is also in their best interests to obtain a loan for your investment property. They can do all the legwork, paperwork, research the available loans and products on the market. Help you also apply for any government grants and concessions whilst keeping you updated on the progress of your application and reviewing your portfolio at a set interval.
3. Get help from friends and family
Your mortgage broker can talk to you about family pledge and guarantor options. There are several loan products were your direct family can put their home as a security to help cover your deposit and/or stamp duty fees. Your significant other can be guarantor to help you meet the repayments.
4. Think Long-term
Property investing is a long-term strategy. Which usually means you wont see results immediately and it can boring. Unlike the share market were we can see the realtime value of our portfolio, property takes patience to realise capital growth and gains.
5. Goto seminars or talk with other investors
Learn from other investors, google investing seminars, join a meetup.com group.
6. Learn to negotiate
Learning to negotiate will be a necessary skill as a property investor. By being a good negotiator you give yourself an advantage of getting a better deal on the property you are purchasing.
7. Develop a property Investing Strategy
There are many readily available resources to help you learn about property and the different types of strategies available.
You can see these books from popular authors in Australia about the Australian market:
– How to Achieve Property Success
– From 0 to 130 Properties in 3.5 Years
– What Every Property Investor Needs To Know About Finance, Tax and the Law
– From 0 to 260+ Properties in 7 Years
– How To Grow A Multi-Million Dollar Property Portfolio – in your spare time
You can also use property investing software to help you find investment property:
8. Ensure your credit history is clean
Be sure to pay all your bills and any loans payments on time.
If you are constantly in arrears or missing payments it may give a potential lender the impression that you will fall behind on the loan you are applying for.
Your mortgage broker can also help check your credit file with your consent if you suspect there may be default due to a unpaid debt.