Property Twins | Property Twins™
[rev_slider ]
In: Property Investors0

Don’t ask for security ask for adventure! That’s what our virtual mentor Jim Rohn said and he was right. Most people plan their holidays better than their financial future. Property investing is risky. However so is getting out of bed in the morning. The biggest risk is taking no action for a better financial future. Think hard, not just work hard!

Is there something that is stopping you from taking action – may be analysis paralysis? Fear? No direction?

Here are some ways risk can be mitigated while building a property portfolio:

SELF EDUCATION

  • Educate yourself through reading books
  • Review resources such as realestate.com.au / domain.com.au, onthehouse, Price Finder / RP Data
  • Talk to real estate agents and network with those who are where you would like to be. We are an average of the 5 people we spend the most time with, so surround yourself with people who are where you want to be

DO YOUR NUMBERS

  • Aim to buy a cash flow neutral / positive property so your lifestyle is not impacted AND so you can keep your doors open to build as big a portfolio depending on your goals, depending on your resources
  • Build and maintain 3 to 6 months’ cash or equity buffers for all your properties to ensure you are covered in an event of vacancy or unforeseen maintenance issues or change in circumstances
  • Look at comparable sales, rental returns and vacancy rates in the area you are looking to buy to make sure you are not overpaying and will have a reasonable cash flow position
  • Buy established where you see there is a huge price gap between the brand new and the established property and the rental returns not much different or better
  • Buy brand new –only when nobody wants to buy them and you can actually get a deal at “market value”, when it’s cash flow neutral (or does not cost a lot to hold), poised for capital growth

FUNDAMENTALS

  • Buy in regions with multiple industries and not one industry towns such as the high-risk mining towns
  • Consider historical growth. If a market has been booming for a number of years, what is the likelihood of it continuing to grow? Are there better opportunities in other markets, with better rental returns? As values increase, rental returns decrease, which leads to decreasing interest in a particular market / location, with investors moving on to areas which offer better rental returns, and therefore lower holding costs
  • Australia has multiple real estate markets, which are at different stages in the property cycle, offering varying rental returns and fundamentals. You do not necessarily need to buy in the city where you live. You can leverage of other experienced investors’ knowledge, and engage professionals who specialise in other cities to help you with your purchase(s)
  • Consider where you can afford a better-quality property (e.g. a house with land component). Land appreciates in value, whereas buildings depreciate

BUILD A SOLID TEAM

  • Ensure you have a quality team around you with an investment savvy mortgage broker, solicitor, building and pest inspector, strata search company and property manager
  • Work with your mortgage broker to figure out what’s possible for you

INSURANCES

  • Ensure you have adequate building and landlord insurances in place
  • Ensure you have adequate Trauma, Death and Total Permanent Disability (TPD) insurances in place, in line with your assets and liabilities

TAKE OWNERSHIP & ACTION

  • Write down a strategy that works for YOU. What are your negotiables? What are your non-negotiables? What really ticks your boxes?
  • Take charge of your financial future, rather than relying on external factors such as tax rules
  • Last but not the least, TAKE ACTION. As one of our mentors says, ACTION cures FEAR

Hear what Jim Rohn has to say about RISKS


To Get Started: Schedule A Chat with the Property Twins Team
Join Our Exclusive Facebook Community of 6,000+ Property Investors: Property Addicts Australia
Join our Exclusive Search & Select The Right Property in 90 Days 5-Day challenge

Note: Please ensure you always seek specific specific credit, tax, financial, legal or investment advice. Property Twins' Blogs are not a substitute for personal and specific, taxation, financial, legal or investment advice

Leave a Reply

Your email address will not be published. Required fields are marked *