Expert Advice: by Sam Saggers
If you count yourself among those Australians who want to invest in property but you don’t believe that you can – or you think that it’s only for those who have loads of money (or a rich relative) then I’d like to invite you to challenge those ideas.
If you’ve ever wanted to invest in property, here are 6 Top Tips to Get You Started:
1. Use What You’ve Got
Tap into your home’s equity
If you own your own home, you very likely have money just sitting around doing nothing when it could be working for you instead. You might be surprised at the options available so rather than sit at home doing nothing, schedule an appointment with a financial advisor who is knowledgeable about property investing and see how you can get started investing.
Get together with other people who want to invest as well
If you don’t own your own home or don’t have enough set aside for a deposit, consider investing with one or more individuals under a joint venture scheme. Consult with your financial advisor or property investment mentor to see if this is a suitable option for you.
Set up a budget you can live with
Rethink what you need versus what you want so that you can save money to start your dream. If you need help, get it, but don’t let another day pass without doing something about your finances. You’ll need to maximise them if you really want to enjoy financial freedom.
Ask yourself - do I have what it takes?
Do you have the drive and tenacity to stick with it even when the times get tough? Property investing is not a get rich quick scheme. You’ll need time and plenty of patience to sit out the good (and the bad) times. Just like any investment it’s not without its share of risk, but the difference between property and other forms of investment is that you hold a significant amount of control over your outcome!
2. Get In The Know
Mind the company you keep - surround yourself with successful people
You’ve heard the saying ‘you are what you eat’? In terms of success, you are what you read, watch, and who you hang out with! When you surround yourself with successful people you can learn so much from what they do and don’t do, if you pay close attention.
Separate fact from fiction (fear)
Don’t listen to the hype. Horror stories of property investing, when broken down into their simplest form, often reveal an error - or series of errors - that led to the poor result.
Do yourself a big favour and research the truth about investing property - from a wide variety of sources before discounting its benefits.
3. Put Your Knowledge To Work!
NEVER get emotional about real estate
Obviously, you can exclude your childhood home from this idea. Who wouldn’t be captivated by the memories that flood your mind’s eye when you drop by to visit mum and dad?
When searching for a profitable investment property, only let your imagination run wild when you’re calculating the add value strategies you can undertake to drive up your profits!
Don’t put all of your energies in one deal
Property investing is a numbers game and the more offers you throw out, the better the chances you’ll get one that hits the sweet spot! Always think of your next deal when closing on your current one.
Try to buy at the bottom of the market
Study and continue to grow your understanding of the market. Four quick ways to know you’re at market bottom include:
4. Learn the power of having a team
- Capital growth of 2.5% per quarter (totaling 10%+ per annum)
- Increased interstate investor activity
- Auction clearance rates above 50%
- Increased local investor activity
Property investing works best when you’ve got knowledgeable individuals helping you along the way. Some of the professionals you’ll want to search out include a property manager, accountant, financial advisor, and mentor - just to name a few!
5. Never Stop Learning!
Understand the economics of a market
As I mentioned earlier, get to know what drives a marketplace. Once you understand the synergies of a particular area - what makes it “tick” - you’ll automatically make smarter decisions about investing in that location.
Learn to quickly calculate the profitability of a property
Learn how to do what I call the “back of a coaster” calculation. Begin by figuring out how quickly you can recover your cash. You want to have your deposit back in 12 to 18 months, rather than waiting 2 years or more.
Can you boost your ROI by forcing value through a small renovation? Does it appeal to the area demographic? You will have obviously weeded out unprofitable suburbs before even getting to this point so you’re left with areas that hold potential for capital growth (which is how you REALLY
Have a plan and stick to it
If your plan is to stretch your equity as far as you can by leveraging high, don’t stray from that plan. If it’s to purchase one property each year for 10 years - a very good strategy, by the way - then stick to your decision.
Don’t be swayed by any emotions you fear, however, if the numbers insist you change your plans (at least for the short term) then do so. Keep your final goal in mind with every decision you make.
Invest in your education
Can you imagine doing your job without being educated? Then why would you think property investing would be any different? No matter how long I invest in property I will continue to learn and grow my skills - we all do.
Don’t buy it if you can’t sell it
Shoot for properties that will appeal to the widest possible demographic. Don’t limit your progress by purchasing a home that few individuals will be interested in owning.
6. Become a good haggler
Learn how to “wheel and deal” with the best of ‘em!
- Find what the vendor REALLY wants – is it a quick, easy sale or a profit?
- Know the condition of both the vendor and the market.
- Use agents to condition vendors to a realistic price point.
- Get a third party to condition the price as well (if possible).
- Anticipate the vendors’ objections and have an answer for them.
Realise that if you’re not emotionally involved with the property you’ll become a much better negotiator, as you’re not particularly concerned about the outcome. The vendor, however, is very likely anxious to get his asking price.
Sam Saggers is CEO of Positive Real Estate and Head of the buyers agency which annually negotiates $250 million-plus in property. Sam's advice is sought-after by thousands of investors including many on BRW’s Rich 200 list. Additionally Sam is a published author and has completed over 2000 property deals in the past 15 years plus helped mentor over 2200 Australian investors to real estate success!
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
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