How to Invest in Australian property
Quick guide on how to Invest in Property
How do I start investing in property?
If you are looking to start investing in real estate, or you are trying to grow your portfolio, it can be a scary adventure if you don’t have the right information or the right support when you need it the most. Here is a brief introduction into how to invest in property. Plus, you will be able to find additional support if you sign up.
Everything we suggest below is basically how my wife and I got started in investing. We started with very little. With the right advice and support, you can grow an investment portfolio like a pro.
Lets get started.
Turn off the noise – first of all. One of the best steps to start investing in property is to stop listening to the news – and sometimes even stop listening to family and co-workers’ opinions on the subject.
They can be the biggest influencers in your life, yet possibly have the least amount of information and education about the property market. You need to have a clear head and not be swayed by the doomsday fears and market crash speculations out there.
Get educated – it is important to find out what is available in the marketplace.
There are a variety of strategies and real estate investment options available for you. You just need to find the one that you are comfortable with. Pick one that suits your budget and lifestyle. Learn more here.
My wife and I read books on the subject matter and we also went to seminars and meetings to discuss options with like-minded people.
Understand your “Why” – this is going to be your driving force when you face certain difficulties. Just like everything else in this world, you will come across problems that can be discouraging. Your goal needs to be clear, and your drive needs to be focused. Understanding your “Why” will keep you on track during the tough times.
My personal “Why” is that I want to retire with enough wealth to live comfortably and without compromise. So that means I need to have a $2 million nest egg to retire comfortably.
Now for most of us this is unachievable unless you have a plan, education and drive. It is possible – you can do it!
Have a Strategy
The key behind a successful investment portfolio is to have a strategy. The strategy should cover a variety of aspects. It will include the type of property you will buy, the cost and setup fees involved, and what you will do to the property once you acquire it. Just buying a property and renting it out is not necessarily enough. You need to have a deeper understanding about what your strategy is going to achieve. See more about strategies here.
Many people who buy an investment property without a plan, can end up having a bad experience due to a number of factors. The main factor will be that they do not see a return on their investment. This can lead to them losing money, and having nothing to gain, because they did not have a plan or an understanding of the real estate market.
My first property was an investment disaster. I lived in my unit for a number of years and then I moved out into a house. After 10 years, the return on my unit was very poor. The reason I had this experience was because I did not do any market research at the time about the location I had invested in. Neither did I understand that capital growth was higher in another neighbourhood, only a few blocks away. Had I known more at the time, I no doubt would have made a wiser decision.
Find a Good Mortgage Broker
The banks want to be your best friend, and they want to lock up all of your assets under one roof. This will not benefit you or your goals. The banks want to have control over all of your assets. If you run into trouble with one property, the bank will use your other properties to get their money back.
If your other properties are with other banks, you are creating a fire wall, and they are protected from the other banks.
I use a highly reputable and award winning broker. He understands the banks and how they operate, plus he understands my needs and goals.
Having a broker creates a buffer between you and the bank. If anything goes wrong or you need extra support, a good broker will stand in the gap and assist in trying to solve whatever problems arise.
Having additional support here is critical – you want to have somebody here to guide you through some of the tough processes. These guys know how the banks operate and they know your consumer rights. Having a good broker can save you thousands of dollars and they will be there to guide you through the tough decisions you may need to make along the way.
Our broker has set up all our different properties with different banks. This is good for me as it protects our properties from the bank. We now use the bank as a resource tool for our wealth creation.
Have a Good Accountant
When you acquire your first investment property, then go on to buy more, your tax return at the end of the financial year will get more complex. You need to obtain professional help, as this really needs to be done right. At some stage you will be eligible for Tax Variation or ITWV2017, which is an ATO form that allows you to pay less tax throughout the year. This is calculated on your expected income/tax return at the end of the financial year.
So if you pay less tax throughout the year, this means you can spend more on your investment
properties. This forms part of a good strategy, as it assists to pay the bills along the way, instead of relying on your tax return once a year to cover costs.
A good accountant will also be able to help you access all that you can legally claim for. Having a good accountant will also help you sleep at night, because the last thing you want is the ATO doing an audit. Things can get very messy and very expensive if your accounting has not been done right.
We have also used our accountant to set up our Self Managed Superannuation Fund (SMSF). We have taken control of our own Super and have used it to invest in property.
Get advice from Investment Property Analysts
The strategy that we have been using is buy and hold. This requires expert knowledge in the property market. Just buying a house in a suburb you like, that is near a school, bus stop or shops, is not necessarily enough. There are many more factors involved that are part of creating capital growth in the real estate market.
We rely on property analysts to give us the best advice on where to invest. You may be surprised to know how much information is out there regarding future development and town planning.
Having a deep understanding about future developments and high growth areas is critical for having a successful investment property. My latest property investments have been bought in areas that may appear to be quite dull.
However the reality is quite different – the government has enormous plans for further development in these areas. This will put significant pressure on my investment properties and cause them to grow. I need my properties to perform and give me the best result possible in order to realise my goal.
Getting expert advice is critical. These guys spend their days analysing the Australian marketplace and property development, so they know what they are talking about.
Have a Support Network
Getting involved in the property market can be stressful and scary if you do not have the right support. Having the right people by your side that understand your goals and vision is critical if you want to succeed. We bought our first two properties by ourselves, and then we hit a brick wall of stress. I did not have the right support or knowledge to put the best plan in place for us.
We felt alone and isolated. After a few seminars and workshops, we found what was right for us. We have received a generous amount of support and guidance. We lean upon all of our professional contacts, to help us make the best decisions.
Without them and their continuing support, we would find this quite stressful and would also be left wondering if we had made the right decisions. We will continue to use our support team on an ongoing basis.
What we recommend from experience
Our greatest leap forward for us was going to a REIA all day workshop.
There we discovered everything we needed to know about property investing. We had all our questions answered, and even learnt about stuff that was beyond what we could have imagined at the time.
It was a one-stop shop for all things about real estate investing.
It covered everything, and they also put us in contact with industry leaders to assist us to achieve our goals.
We use their recommended accountant, brokers and analysts. I have seen our portfolio grow to double it’s size in 18 months. And we have achieved more in the first year than what I had previously done in 10.
As mentioned earlier, through their advice and support, we have set up our own SMSF.
Getting advice from experts is a must if you want to fast-track your success in the property market. I do not have the time to analyse the market. Let a professional do this for you too.
Take the next step today. Because of our partnership with REIA we can offer you a free seat in the next property workshop. You will at least walk away with plenty of insights to think about, and get a fresh perspective on property investing success. REIA Review here