Form a Team
Investment is not a one-man job. You can’t invest successfully in a property on your own. You must work with a team of experts who will assist you in realizing your dream. The team you choose should be competent and trustable. You will need assistance from property investment specialists in the following areas:
An independent property strategist
An experienced buyers agent
A finance broker
An accountant A solicitor.
Save a Deposit
This is one of the hardest aspects on your road towards financial freedom.
You absolutely have to spend less than you earn. Although there are other ways, this is the simplest approach. You can earn additional income via a number of different methods.
You can invest in buying a property as this will help you in the future. To earn an extra amount of money from your property, you can put it up for rent and earn extra cash every month that you can save for future use.
The Correct Ownership Framework
Keep your end target in mind and don’t lose sight of it anywhere along the way. Get your accountant to help you with the correct structures right from the start. It is recommendable to set up a trust structure when you start off, although it appears to be unnecessary and expensive at that point.
Pre-Approved Finance for the First Purchase
When you are set up to make your first purchase, whether it is an investment or a house, it is a good idea to have your finances sorted out. When you have all the figures ahead of time, it will help you with your purchase and also increase your bargaining power.
You can also face negative gearing??? for some time to come. When this situation arises, you might need some extra cash.
You must have a line of credit, or an offset account to support you. It will buy you time if you can’t face negative bearing for a longer period of time.
Buying the Property
Investing in your first property can play a vital role in your future endeavors. If done right, it can act a springboard for your future portfolio. It will perform better than averages in terms of capital growth.
The expert property team will assist in singling out the perfect property for you. This is not a task for someone unknowledgeable in the field.
There are less than 5% properties on the market that are considered investment grade and they should be on top of your list.
Risk Management Strategies
Every investment involves some kind of risk. It is impossible to avoid the risk at hand. Risk avoidance is impractical; you have to opt for risk management.
Evidently, the first rule of investing is not to lose money. Risk management will help you to avoid big and small losses that may come your way. It is a skill that helps you establish what the potential risks are and how to minimize them.
You can create financial buffers to support you when the economy is fluctuating.
Another example of risk management is to have properties in asset protection based structures.
Make sure your team is composed of people who are able to view investment strategies from all angles. They must possess the qualities to highlight potential risks and to implement the right techniques.
Keep an Eye on the Cash Flow
Negative Outlook
Your investment strategy is mainly based on building your asset base aka your equity, but you should also be mindful of the cash flow. Make sure that you have enough cash to see through any negative gearing on your property. Your funds should not be squandered just because the cash flow receded a little.
To accomplish this, you must learn to:
Live within your means Have a financial buffer.
