Achieving a healthy portfolio of investment properties is no easy feat, though once achieved, can lead to exponential improvements to your capital wealth. It is vitally important to approach this investment in the right way, to ensure you are on your way to financial freedom. We have devised a list of 6 key tips when approaching the property investment process.
1.Market Sensing – do your homework.
It goes without saying that research is important. It is important to know how to analyse and research a particular location effectively, to know how value can be extracted and to easily identify any red flags that may catch you out.
2.Set your goals.
What are you hoping to achieve with your investment? On what time frame? Setting specific goals for your investment can provide stable benchmarks from the outset. These objectives should be measurable and realistic. What can you action now? Where do you want to be in 10 years? What is the end goal?
3. Seek Re-valuation of your existing property.
If you are planning to purchase an investment property, it is important to understand the value of your existing assets. While property valuation does cost money, it can provide access to additional equity from which to leverage from. Valuations are often tax deductible, so it may definitely prove to be worthwhile, particularly in a strong property market.
4.Understand the Property Cycle.
Timing is everything. The fluctuating cycle of peaks and troughs can be difficult to keep in check. Knowing when to purchase can severely affect the growth in value, which can have serious implications for future investment opportunities.
5.Understand your risk profile.
What does risk mean to you? We know that all investments bear some degree of risk. It is worth knowing and understanding how comfortable you are with the possibility of losing a proportion of your investment. There are several risk profile tools available to help you understand how much risk you can live with, and when you might start losing sleep.
6.Use a Deposit Power Guarantee.
Securing a deposit when you already have a home is undoubtedly the largest challenge in purchasing an investment property. A Deposit Power Deposit Guarantee allows you to defer payment of cash deposits until settlement, particularly when borrowing 80-100% of the purchase price. Deposit Power Guarantees can be used for most types of commercial or residential property and are an excellent tool to help you achieve your investment goals.
Don’t become overwhelmed by the process of buying an investment property. With well aligned goals and the right information at your fingertips, the investment process does not have to be a difficult one. In 20 years’ time, you will thank yourself for it!