Being a property investor is simple, isn’t it? Just buy a property, then sit back, collect the rents, and fund your retirement.
If only it was as easy as that.
Granted, investing in property is a simple concept, but the execution is a different story.
I’ve often said property investment is simple, but not easy.
The rules are simple if you know them, but the execution is more complicated.
And that’s what we’re going to talk about in today’s episode. Initially, I’m going to give you six tips to help you get on top of the property ladder.
Then I’ll talk with Brett Warren about tips that he would have liked to know when he was first investing.
Then, in my last segment, I’ll share some money tips.
- Invest in your knowledge before you start investing in bricks and mortar
Learn from others who’ve not only achieved what you want to achieve, but who’ve maintained their wealth over a long period of time.
Surround yourself with like-minded people and get a mentor who will not only inspire and challenge you, but can also give you some perspective.
- Marry your investment plans with your investment capital
Remember that all booms come to an end and, like in the past, this new property cycle will peak.
So, while enjoying the current phase, make sure you’re financially prepared for the market as it changes.
- Use your portfolio to reduce your risk
Strategic investors look forward to the best of times but protect their portfolios for the tough times that will inevitably come.
Rather than gearing to the max, they take a more prudent approach by building an emergency buffer.
They also own the type of property that will be in continuous strong demand by owner-occupiers.
- Do the due diligence before you do the deal
Sophisticated investors have an investment plan that they adhere to and carefully evaluate any potential investment opportunity in light of their long-term goals.
They know that this makes their investment decisions less emotional and their results are more consistent and predictable.
- Keep your sights set on your goals
While most investors buy a property and hold it for the long term, strategic investors regularly review their investment portfolio’s performance in light of their long-term goals.
Questions to ask when reviewing your portfolio’s performance:
- Is this property performing to my expectations?
- Is this property likely to outperform the market?
- If this property were for sale today would I buy it again?
- Does this property still fit in with my overall plan?
Treat your property like a business and evaluate your assets dispassionately and take appropriate action.
- Remember that in real estate, less is often more
Concentrate on getting the best deals for your investment goals, not the most deals.
When it comes down to it, capital growth is key in building wealth through real estate and properties that outperform the long-term averages always come at a price.
Location does 80% of the heavy lifting
Successful investors look for locations that have a proven track record of strong capital growth which will outperform over the longer term because of their demographics.
Choose capital growth over cash flow.
Most of your assets when you retire will be your tax free capital growth – the increase in value of your home and your investment properties – not money you have saved or rent that you’ve collected or superannuation you’ve put away.
Success comes from a series of small things.
Take every opportunity you can to better yourself or your circumstances, change your habits to be more productive and work hard towards a long term goal that you are committed too.
Successful people have multiple streams of income.
You cannot save your way to wealth and success.
But by investing the income you save in high growth assets, diversifying your portfolio and adding multiple streams of income from property, shares and business you can fast track your wealth and are not solely reliant of your salary.
- If you are born poor it’s not your fault, but if you die poor it’s your mistake
You have to take responsibility for your financial future.
You have to become financially literate.
Becoming wealthy is a long journey and it’s not easy.
- Don’t follow the herd
Successful investors know that to get to the top of the property ladder, they need to overcome the fears that hold most people back from ever stepping foot on the first rung, or of not waiting for the perfect time or the perfect investment.
And they also understand the importance of, wait for it, going against the crowd!
- You should know how many months you have left in your wealth window
Your “wealth window” is the time from now until when you stop receiving an earned income.
How much are you going to earn in that time?
Your financial future will depend on the balance between enjoying your money now and planning for then.
- Practice delayed gratification
Successful people possess higher patience and an aptitude to postpone the enjoyment of their work.
Learning to delay gratification rather than seeking immediate satisfaction is essential for success, particularly when it comes to things like investing, business and making money.
- Don’t think you can ever make money by trading
Whether it’s property, financial commodities, shares etc.; trading is really a form of gambling.
Instead stick to the wealth creation strategies that have always worked; either investing in income earning real estate, a business or a share portfolio.
- Avoid Credit Card Debt
Remember the balance on your credit card isn’t your money, it’s the bank’s and they’ll charge you for the privilege of using it.
- Insure yourself
Insure yourself against bad surprises such as cancer, a heart attack, a car accident or death.
If you don’t insure yourself when you don’t need it, you will find yourself uninsurable when you do need it.
“Remember to prepare for the worst while hoping for the best. In other words, maximize your upside while covering your downside and you’re going to remain in control of your destiny.” – Michael Yardney
“You’ll find that the majority of what you own when you slow down, when you retire isn’t money you’ve saved, it’s not rent that you’ve earned, it’s not superannuation you’ve put away, it’s capital growth.” –Michael Yardney
“But if you want to achieve financial excellence, one of the best things you can do is not follow the herd.” – Michael Yardney
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