Our guest writer this month is Albert Murphy from Your Property Empire with his 5 tips.
Here you will learn five advanced property investment tips and techniques.
In fact, these are the same tips I’ve used to grow my portfolio to 9 in a few short years.
1. Get your Property Investment plan
Investors that fail to plan, plan to fail.
Many property investors think buying real estate as nothing more than sticking some money into an asset that is guaranteed to go up.
‘Just get a foot in the door and you’ll make money from property’, they say. So what about those investors that got their foot slammed after investing in mining towns? Or bought off the plan Units purely for tax benefits?
2. Don’t follow the crowd
Over the past year, it has felt like one day we are being told property is booming only to be told the next day we should start preparing for doomsday falls of up to 40%.
So who is right?
During the depths of the GFC, Warren Buffett said: “Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.”
The bottom line is following the crowd, or market commentators into the latest property hotspot based on what everyone else is doing is a bad strategy, and one that generally leads to property investors losing money over the longer term.
As Buffett says, insulate yourself from popular opinion. Do your own research, form your own opinion and build from there.
3. Understand your numbers
Australia’s richest property investor, billionaire Harry Triguboff (worth $12.77 billion), still takes time to review every sale and expense line of his property business. The reality is a lot of property investors get into property doing some quick back-of-the-envelope numbers but don’t go much beyond that. This is why almost 75% of Australian property investors own just one investment property. They are getting held back because they don’t understand their numbers, and the banks won’t lend them more money because their serviceability is being held back by negatively geared properties. Before you buy, understand the cash flow of the property. And more importantly, once you own the property, take a page from Harry’s book and review how the property is performing more regularly than just at tax time
4. Play the long game
I love this quote from Warren Buffett: “Nobody buys a farm based on whether they think it’s going to rain next year, they buy it because they think it’s a good investment over 10 or 20 years.”Buffett decides something is worth investing in because it will last, not because it’s doing well right now.So many property investors are just thinking two or three years into the future or buy at the top of the market when FOMO is at its peak. This comes back to having an investment plan in place. If you have a goal of building an investment portfolio or creating passive income of $100,000 in 10 years, put together your plan and start working on it today. Talk with your mortgage broker & your Investment Property Advisor about your investment plan, understand how different investment properties can affect your borrowing capacity and ultimately hold back your goals of building an investment portfolio.
5. Buying the wrong property
Of course, this is one of the biggest investment blunders of all!Firstly you’ll need to choose the right investment location, one that will outperform the averages because it is going through gentrification, or because it is where affluent owner-occupiers want to buy.Then you’ll need to buy an investment-grade property – one that will remain in continuous strong demand by owner-occupiers and tenants in the future.With close to 10 million properties around Australia, less than 2% of those currently on the market are what I would call investment grade.
Most first time investors get the above steps wrong because there’s a big difference between knowing your local neighbourhood and understanding the investment fundamentals of your property market.
That’s why more and more property investors and home buyers are turning to the independent team of property strategists at Your Property Empire to help them navigate the property field.
So if you are considering purchasing please call Albert on 0404 985 304 for a FREE 60min consultation to see if property is right for you.