As I walked through Sydney’s CBD from NAB back to my office, my stomach was full of butterflies. In my handbag, I had just placed a bank cheque for $13,500 – it was every cent I had, save a few hundred dollars that remained in my high-interest savings account.
And I was about to hand it all over. The cheque was to be sent to the Office of State Revenue, to cover the stamp duty on my very first piece of real estate: I was buying an investment property.
I was equal parts excited, terrified and anxious, and more than a little nervous about handing over all of my life savings. I was excited to be buying real estate – investing is something I’d seen my friends and family do, and I was keen to enjoy some of the success they had experienced. But I was also so fearful of the worst-case scenarios: what if the property doesn't grow in value? What if the tenants cause a fuss? What if I’m making a huge mistake?!
To be honest, there were points during that walk where I considered turning around and depositing that money right back into my own account. But I didn’t (that’s the thing about investing – properties are secured by contracts, so I was locked in!). That experience was almost 15 years ago and I’m so grateful that I pushed forward, because it kicked off a lengthy property investing journey that has changed my life.
I only wish the resources that are readily available now, like the NAB Life Moments hub, were there for me when I was researching about my first investment property.
Here’s what I’ve learned along the way – including the costly mistakes and the hard-won lessons:
You have to spend money to make money
When I first began researching how to invest in property, where to buy and what loans to get, I realised how little I knew about investing real estate.
Stamp duty was the first massive shock to the system: I have to pay a levy of how much?! Lenders mortgage insurance was the next expensive blow; not only did I have to pony up a large sum of cash for insurance on my loan, but when I learned that it covered the lender rather than myself, it was crushing.
I was frustrated that I had to spend so much money, just to get my foot on the property ladder. But soon, my attitude around these expenses changed. I realised that without LMI, for instance, I wouldn’t be able to invest at all, as it would take me years to save up a 20% deposit. I also decided that if I wanted to succeed as a property investor, then I would have to accept the fact that these are the costs of doing business. So, I started factoring them in and simply accepted them as part of the journey.
You won’t always get it right
This can be a hard pill to swallow. The truth about real estate investing is that it’s not an exact science. There is plenty you can do in terms of research, planning and due diligence, to give yourself the best possible chance of success. And in the pages of Your Investment Property magazine every month and on our website, we do our best to arm investors with the tools and resources they need to make informed, proactive decisions about buying an investment property. This is also how NAB are trying to inform their customers through the Life Moments hub, supplying them with all the knowledge they need to make the right choices when investing in property.
Ultimately, however, you won’t always get it right. Sometimes, you’ll make a decision that you look back on and think, well, I wish I hadn’t done that. For me, it’s the time I pulled out of a contract on a prime Sydney property because they didn’t allow pets (it was a home, not an investment, and I had a). It was $350,000, and that property today is worth $750,000. I used to joke that my dogs’ cost me hundreds of thousands of dollars!
Is it frustrating? Absolutely. Do I regret not buying that property? You bet I do! But I also know that if I had bought that property, it would have set off a chain reaction of different events, and my life wouldn’t be exactly where it is today. So, I don’t truly regret it; it’s a decision I live with and learn from.
You must be ready to learn
I’ve been writing for Your Investment Property magazine since 2007, and I’ve been the editor since 2016. During that time, I’ve interviewed countless investors, experts and real estate professionals. I’ve also personally bought and sold more then a dozen properties (with a few renovation projects thrown in for good measure), so I’ve learnt quite a lot about successful property investing along the way.
And do you know the biggest lesson I’ve learned? It’s that I’ve still got more to learn. Always.
At the beginning of my property journey, like most people, everything was trial and error. For instance, I had been investing in property for two years before I discovered depreciation, which is a powerful tax break for investors that can add thousands of dollars to your tax return each year.
It would be another three years before I discovered offset accounts, which allow you to “offset” your savings against your mortgage interest rate, and effectively pay down your mortgage sooner. This was a complete game changer!
What I’ve come to realise is that while there are some fundamentals of investing in property that never change – supply and demand, and population growth chief amongst them – there are also aspects that continually evolve. Changing market conditions, new regulations, growth or contraction in the economy, your own shifting attitude towards risk: these are all factors that can influence your approach to investing.
That's why you’ve always got to be open to learning as much as you can about every aspect of investing, whether you’re researching the best place to invest in property, or looking for the best loan to fund your next deal.
You’ve got to hold onto this attitude of being open to education for as long as you’re investing. You could own one property or 10; you may have been investing for 18 months or 18 years. Regardless, the fact remains: there is always more to learn, in order to improve your strategy, increase your profits and ultimately become a successful property investor.
This article is a NAB paid promotion and was written in collaboration with NAB. As always, all opinions are my own.
is the editor of Your Investment Property magazine
and presently has four properties in her portfolio.