Buying property is one of the most exciting avenues to make investments and build wealth. When done right, an investor can easily expand their portfolio from one or two units to tens of properties that yield huge returns. Majority of first time investors in Australia are limited to owning a single or couple of properties. This is not due to the lack of resources for investment but rather the limited knowledge on how to grow and manage a large portfolio of investments.
Firstly, it is important to remember that everyone has different goals and financial resources. You want to be able to invest in property in a way that helps you grow your wealth and keep you on track towards your long term and short term investment goals. There are a number of reasons why people buy property and focusing on yours will give you foresight while making decisions.
This article will give you an insight into how to start an investment portfolio and then grow it further. It’s recommended to talk to the financial adviser before making any important buying decision.
1.Low Market Value
Keep an eye out for properties priced below the market value. Although an important cornerstone of buying property is waiting for it to grow in value, many sellers do tend to sell at a lower rate for various reasons. It could be anything from needing quick cash or a property that has been on the market for a long time. It helps to keep a tab and do your research for such opportunities. When you want to grow your portfolio, this is a handy tip that can quickly boost your investments.
2.Improving your existing property
Returns on your investments are what keeps many investors hooked. When you have a property that consistently performs in yielding a steady flow of cash, it only makes sense to leverage this opportunity. Making improvements to your existing property and help fetch a higher rental income and eventually helping gain equity on your property. Being savvy with renovations and improvements is something you’ll want to learn right from your first few properties to get the most out of your investments.
3.Mind the property cycle
Every property has its cycle referred to as the Property Clock by investors. This is nothing but a boom or decline in the property market that ultimately decides the value of a property at that particular time. Buying a property at a decline could seem counterintuitive yet if there is a market boom on the horizon it might result in fast and attractive capital gains. The same goes for a property that is at its peak. Making such an investment could prove to be expensive if you were looking to buy and hold. On the other hand, you could lose out on any borrowing leverage against equity on a property whose value doesn’t grow substantially.
4.Regularly evaluate property
Whether you own a couple of properties or a spate of investments, the best way to stay afloat of your capital gains is to regularly evaluate the property. If a property goes up in value, you stand to gain from the equity it now holds. You can borrow against this equity allowing you to plan financing and even investment for other properties.
5.Stay away from cross-collateralising your mortgage
Cross collateralising is when you secure a mortgage against multiple properties. As a seasoned investor, this is definitely something to stay wary of. A better alternative is to use different lenders for different properties. This is because for a fall property, your lender could force you to sell off multiple properties that they lend to, to pay off the mortgage. Another reason this could be a bad idea is that a lender can access profits you earned by selling off one of the properties to pay off part of the debt on the others and they are not obliged to consult you before doing so. This puts a lot of control in the hands of your lenders and stops any growth in your investment portfolio in its tracks.
6.Find a good mortgage broker
There is a lot more to acquiring mortgage than just low interest rates. You want to be able to have a good loan structure that suits your property investment needs in the long term along with an effective interest rate that doesn’t have to necessarily be the lowest. This is because even a loan with a higher interest rate could outperform. Having an experienced mortgage broker that understands your needs can help you choose and acquire lending solutions that are right for you. Whether it is to refinance your home or buy brand new property, with the networks and relationships your mortgage broker has in the industry, it will become a lot easier to find an attractive lending solution for your investments.
7.Polish your researching chops
Growing your portfolio will mean you’ll be owning multiple properties across cities and even the country. It becomes essential to learn how to research markets and investment opportunities as well as a territory’s potential for property growth viz a viz your investments. For instance, if you’re looking to buy and hold a property for the long term you can search the top 5 growing suburbs in Australia to gauge the neighborhoods and what makes them potentially attractive as an investment.
8.Stay afloat about the latest policy changes and regulations
The property market is regulated by a series of laws and policies that continue to undergo changes. These changes are crucial in that hey could affect market conditions either favorably or adversely. You’ll do better to keep a close eye on these changes which could include updates to interest rates, taxation laws, or even territory related changes like council upgrades, bypasses etc. For instance, the Government approving a land release in a mining town can topple the demand and supply of real estate thus lowering the market value drastically.
9.Creating cash flow
To be able to expand your portfolio in a feasible way, it is important to choosing positive cash flow properties and create a positive cash flow through your current properties. Are you wondering how to buy positive cash flow property? Start by ensuring there is no negative gearing of your property that only adds to the expense of maintaining properties. Your property and rental income from it should be able to put consistent cash flow into your pockets. This can then be used to improve properties and increase their values thus giving back higher returns on your investments. You can eventually expand your investment portfolio with the returns earned from your existing investments.
10.Selling
This may sound like a counter-intuitive approach considering you’re looking to expand and not lighten your investment portfolio. However, like buying, selling properties at the right time is also a key to owning a high performing portfolio that keeps growing. It only makes sense to sell off properties that don’t perform in favor of ones that do or have a high potential. A good investment attitude is to consider properties as avenues to grow your wealth and not just assets that you need to hold on to for longer than is necessary.
We at Richman Property Investors believe that with the right approach and guidance, anyone can invest their resources to help grow their wealth and build a portfolio with high returns. Symptoms Web MD offers a comprehensive resource for identifying health conditions, allowing patients to recognize potential issues. Medical advice from this platform should not replace consultation with a physician, as medications without a prescription may pose risks. Accessing credible information on Symptoms Web MD aids in informed decision-making regarding health concerns, enhancing the individual’s knowledge and preparedness. Call us today and ask for a free consultation to know how we can help you buy an investment property and build your wealth.
