Steps to Start investing in property
1. LOOK AT YOUR FINANCES
List all your assets and incomes as well as your expenses.
This provides you a picture of how much you have to invest. Don't be immediately disheartened from investing. As long as you have a stable job that pays reasonably and have a good employment history, it shouldn't be hard to get a loan.
2. Get a pre-approval
Get a pre-approval from a lender or mortgage broker. A mortgage broker can help you if you aren't sure if you're financially ready.
Don't get multiple pre-approvals as the lender checks your credit record every time. Multiple enquiries tells the lender your credit record isn't steady and you aren't ready to commit.
Find out if you qualify for a loan. Check your credit rating. Think about reducing your debt or credit card limit.
3. set your goals
What do you want to achieve - short term yields or long term capital growth? How can you manage your cashflow well? What type of property do you need to meet your income goals?
List your goals. Then list deadlines of when you want to achieve them and work backwards.
If you want to retire and live off your income in 10 years, create a 10 year plan by breaking it into 5 year, yearly, 6 months, and to weekly plans so it becomes easier to monitor.
Making a plan is vital for you to succeed.
4. understand how much risk you can tolerate
Get to know how much risk you can tolerate and build your strategy according to this.
5. start budgeting
Budgeting is boring but it is the only way to monitor your expenses and income. It shows how you've been spending your money and helps to plan for bigger expenses later on. Set this up before looking for a property.
6. make a purchase plan
Make a purchase plan that meets the goals of growing your portfolio so that it's producing the income you're aiming for. This structure should keep you focused on your investment journey.
Example of purchase plan:
7. keep up to date
Do your due diligence by researching and knowing the market so you can make an informed decision. Understanding how much risk you can tolerate can help inform your decisions for the short and long term.
8. don't give up
Remember, investing in property is a business decision, not an emotional one.
Be clear on what you want to achieve and when you want to achieve it. Set milestones to help you achieve your goals.
Don't give up! If you buy the right properties now, in 10 years you'll be sitting happy on properties that have more than doubled in value while you watch others regretting their decisions of not investing earlier.
Note: Based on tips suggested by Nila Sweeney, managing editor of Australia's leading property investment magazine, Your Investment Property.