In a highly competitive market where finance is relatively affordable, it’s easy for property investors to become complacent and just ‘go with the flow’.
This sees some get caught up in speculative endeavours that unnecessarily increase the risks associated with real estate, while others dig themselves into a credit hole, jumping in without really considering the financial implications for fear of missing out altogether.
Ultimately, the thing that separates the investment success stories from the dismal failures no one wants to discuss, is planning.
Here are eight steps to identify and implement a watertight property investment strategy that can take you all the way to a happy and profitable end.
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Establish your goals
When do you want to retire and what type of annual income do you hope to enjoy during your post-work years? These are the ultimate financial considerations you need to really give your time and energy to in the beginning of your investment journey, as the answers will guide your every investment move.
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Make it measurable
Place some carefully calculated numbers around your goals and be as specific as possible. Consider what your ideal retirement looks like – will you travel overseas? Buy a caravan and road trip around Australia?
Whatever you intend to do; chances are (as with everything these days) it will cost money. Know how much you need when you get there and it will be easier to work out how much you should aspire to holding at various identified investment ‘milestones’ along the way.
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Establish your timeline
Following on from the above, plan for the incremental steps of your investment journey by working backwards.
Think about the age you’d like to start transitioning into retirement…and how long that transition might be – do you plan to first reduce your hours to three days a week over say a two year period, for instance?
And then work back to determine how long you have to accumulate the necessary asset base to get you there. This step will give you excellent insight into the type of asset that would be best suited to your goals and timeframes.
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Work in regular reviews
Investing without assessing is like checking the map at the start of a three-day hike, before setting out across unchartered wilderness in the hope that you’ll somehow find your way, even though you burnt the map at the beginning.
It doesn’t make sense.
You need to objectively review where you’ve been and where you’re headed at least once every two years. If you struggle to admit your mistakes (as many of us do), then engage a professional third party to help evaluate your portfolio.
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Check in regularly
Are the properties in your portfolio working for you? Are they delivering the necessary combination of capital growth and cashflow to sustain their position in your asset base, and accrue the retirement nest egg you identified at the start of your journey?
If you harbour any doubts as to the health of an investment and its potential to generate sufficient equity to grow your portfolio, then you need to do some serious number crunching, before deciding its fate.
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Seek expert guidance
For the time poor investor, the tasks ascribed above can be enough to make you delay the purchase of your first asset entirely. It can all seem too hard.
But with Australia’s insatiable love for bricks and mortar becoming more about the story of property as a commodity than a ‘family nest’ in many respects, an entire industry has sprung up overnight to service the growing investor demand.
Property is now Australia’s largest industry, having overtaken mining and almost doubling its contribution to Australian GDP in the last decade.
That means there are a lot of businesses in the sector, many specializing in investment. The key is to find the good ones – who are investors themselves and know what they do inside out.
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Make sure it all aligns
How you structure ownership (eg. in your own name, partnership or trust, etc.) and your financial portfolio (all loans pertaining to your property investments), along with things like asset selection, must account for and align with your overall investment strategy.
Remember, this is the plan you’ve created after identifying your end financial objectives, based on your ideal life outcome. If the path you take doesn’t align with your goals it will delay your journey at best, or halt it entirely at worst.
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Don’t get distracted
Distractions are diversions. They come in the form of a friend who tells you about the latest ‘get rich quick scheme’, or drags you to a seminar where someone has a product to spruik while you’re feeling the need for a little retail therapy.
Unlike your ‘SatNav’ that can quickly re-route should you end up taking a left when you should have veered right, it can be incredibly difficult to regain lost time and equity as a result of these digressions.
Ignore the constant hype around housing and always look to your goals and plans first and foremost.
If you feel you need a gentle poke back onto the path of your own property investment success, one of the Trilogy team would be happy to help!
Click here to connect with us today. We can objectively assess your current investment position and identify any necessary tweaks to keep you on track to your wealth creation goals.
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).