Loans Australia Property Finance Blog

In property investment, there are eight rules which you have to follow - these are known as the eight “must nots.” If you keep these rules in mind, plan ahead and put in some hard work, you’ll become successful in property investing. These rules are simple; you don’t need seminars to get information, don’t assume anything, don’t go it alone, don’t become attached to property, don’t cut yourself short, don’t limit yourself, don’t ignore the numbers and don’t forget to be practical. Let’s have a closer look at these rules.

Rule Number One: Do Not Rely on Seminars for Wise Investments

Attend what you want to, but ignore the hype. Seminars are a great way to increase your knowledge about this lucrative market, but don’t rely on the speaker to give you the real facts. You can, however, learn some great strategies and prepare for unknown factors when investing. The speaker is simply presenting their point of view, you need to come up with your own.

Ask yourself exactly what you stand to gain by going to this seminar. Then, ask yourself what exactly the speaker gets out of it: why are they pushing this particular area of property investment? Look into it and determine if there is money to be made or if your time and money would be better spent elsewhere. Before you invest anything, know all of the facts.

Rule Number Two: Do Not Cut Yourself Short

Factor in all the costs of an investment and make sure than you can really afford it. Leave room for unknown costs (they have a way of cropping up). Compare locations and the costs of different properties and evaluate whether it will be cost effective for you to buy them; remember that there may be repairs needed - factor in the time needed too. You’ll also have to be prepared to pay for insurance, inspections of various types, adjustment expenses, valuations, depreciation, mortgage insurance, real estate broker’s fees, taxes, utilities and any other costs you may incur while you own this property. Don’t rely on others for this information - do your own research. Don’t count on income from rents to cover these costs either; be certain that you can pay for all of this without that income.

Rule Number Three: Do Not Assume Anything

Never ever assume anything. Rather than guess, find out the facts. As an investor, you need to know everything in order to make a wise decision about whether or not to invest in a given property. This is not a game of overnight wealth. While you can indeed get rich with property investment, it does take time, dedication and a lot of hard work on your part. You have to know all of the facts at every step in the process. Asking price, calculated return and how much money you’ll have to spend on the property before you can resell it for a profit. You need to know how much rent you’ll receive and how the tenants are before you proceed.

Rule Number Four: Do Not Ignore the Numbers

Watch your numbers. Do not borrow more than you can afford. Remember, this property needs to make you money, it’s not where you will be living. Think of it as an employee. So the more debt you have the more interest you pay. So you must be able to afford to pay the mortgage regardless if you receive rent or not. Watching your overall cash-flow is definitely important.  Remember to be prepared for the unknowns.

Rule Number Five: Do Not Become Attached

Don’t get attached to the property you are buying. Look at the numbers and let them be your guide. You need to think of the house the way potential buyers or renters would. You’re not going to live there - so rather than thinking of it as your home, think of it as any other commodity; you want to sell it as quickly as you can. Think about the purchase price and how much you will make by selling or renting the property.

Rule Number Six: Do Not Do It Alone

Don’t go it alone; at least not at first anyway. You cannot be everything when becoming a true property investor. Learn the ropes form experts in the field. It may seem like the right idea to save money, but if you don’t seek out professional help for all those steps involved in turning properties for profit, you will wind up losing money in the end. To do things right you will need a property advocate, mortgage broker, property assessor, inspector, and an accountant. It is also a wise idea to get a contractor whom you can trust to make some repairs that may come up from time to time. Be frugal, but no penny pinching allowed.

Rule Number Seven: Do Not Forget Practicality

Think first about the practicality of your investment property. For instance, a home is ideal if located near frequently visited places, such as, schools, city transportation, stores, gas stations, and other modern conveniences. Secondly, remember to think quality, not quantity.  What is the quality of the neighborhood like, what are the schools like, and how safe is the area? Then think about what type of disaster zone the house may be in, could there be issues with floods, tornadoes, earthquakes or other natural disasters? The age of the home and neighbourhood also needs to be taken into consideration. How new is the electrical and plumbing, how well insulated is it, and how is it heated or cooled? These issues are big with buyers, renters, and insurance agents.

Rule Number Eight: Do Not Limit Yourself

Don’t stop at one property. The more properties you have in your portfolio, the easier it will become. Each time, you’ll learn, which makes the next investment easier. You’ll also start to understand the market trends and be better prepared to take advantage of them.

Why Seek Help?

Having a good mortgage broker behind you can make all the difference. If you are turned down for financing by banks, look for a creative financing expert; they may be able to find other financing routes for you. Investing in property takes dedication and hard work, along with the willingness to lean from others. With the right financier behind you and all of your research in place, you can make smart and profitable investments.

If you have a proprety financing need that we can assist you with right now, give us a call on 1300 855 430 or contact us and I’ll personally make sure you get the help you need.

Plan for Success!

Stephen McClatchie
Exponential Finance Strategist
www.LoansAustralia.com.au