Property investment is one of Australia’s most famous investment options and a great way to build a financially free future. However, it is a long-term commitment that is not for everyone. There are many ways to make money when investing in real estate and property investment can be highly complicated.
One investment technique is not always superior to another. Depending on your circumstances, you may prefer one approach over another based on risks, possible gain, and several other factors. It can be difficult for beginners to know where to begin, but after reading through this article, I’m sure you will be convinced that investing in property will help you secure your financial future.
Today, I’d like to share nine (9) tips on property investment for beginners looking to invest in real estate in Australia.
There is never a shortage of information available on what aspiring investors should do to assure success when it comes to property investment. But perhaps more importantly, there are pitfalls to avoid, so you don’t become a statistic of the property game.
While many investors begin with the idea of making a fortune in real estate, only a tiny percentage make it through their initial investment, and even fewer make genuine money by climbing to the top of the property ladder.
And as we enter the next stage of our property cycle, there will be more traps and pitfalls than ever. To assist you, I will talk about three (3) essential insights on why potential investors never start their property portfolio journey.
- When acquiring a home, 90% of your decision will be based on emotion and only 10% on logical reasoning. Understandably, this is where you’ll want to raise a family but allowing your emotions to guide your purchasing decision is a typical pitfall that should be avoided at all costs.
Allowing your emotions to cloud your judgment increases your chances of over-capitalizing your acquisition rather than negotiating the ideal price and outcome for your investment goals. Always take your time, do your findings and do better analytical research before purchasing any property.
- Two of the most prevalent characteristics of aspiring real estate investors who never get beyond their first property (or, in some cases, never even make their first!) are acting too impulsively or being extremely careful and ending up never acting at all.
They all think they have it all quickly figured out. They attend one or two seminars and buy into the first ridiculous scheme that’s sold to them without thinking it through, and when it doesn’t make them wealthy overnight, they give up and admit that property investment isn’t for them. This is referred to as analysis paralysis.
The best you can do is establish a balance — learn as much as you can to make you more confident with your financial decisions, but don’t expect to know everything before you start. There will always be something new to learn, and the best way to do it is to immerse oneself in the game itself.
- Over speculation and Impatience: I’ve discovered that many prospective property investors expect to become billionaires overnight.
They believe that the property would solve their financial difficulties quickly, but the fact is that chasing short-term returns in real estate is more about speculating than strategic investing. In reality, most property investors need 20 to 30 years to accumulate a sizeable significant asset base to provide them with substantial financial freedom.
In other words, it’s not as simple as buying a couple of properties and living off the cash flow. And there is absolutely no money to be made in buying real estate and flipping it for short-term gain. Selling property takes time, and there are other charges involved, including capital gains tax.
Now let’s go into the real deal and talk about the nine (9) tips on property investment for beginners looking to invest in real estate in Australia.
When you are new to the real estate space, it can be extremely overwhelming. There are so many different strategies to consider, various ways to invest, and so many diverse areas to invest in.
Even researching an area and attempting to determine if it will be a successful investment might feel fuzzy, and it feels like putting a hundred thousand dollars on red at the casino. You’re merely guessing. It’s so difficult to know where to begin and how to progress down the path of property investing. So today, I want to give you nine different tips if you’re a novice to help you along this property investing journey and, hopefully, provide you with some framework to work with.
- Understanding How To Make Money.
The first tip is to understand how people generate income through investing in property. So, rather than thinking of how rich you want to be after investing in property, my best advice is to sit down and learn how individuals make money in property investment. In general, no matter what technique people use, there are three ways they can generate income.
Positive cash flow denotes the passive revenue that comes from rental income, which most times is more than expenses.
Tax incentives such as depreciation and similar things can help balance the tax you must pay in your work or on any income you generate for yourself.
Knowing how others make money is a useful broad concept when considering which technique will work best for you.
- Establish Financial Targets
While you’re out and looking at investing in real estate, it’s a good idea to spend time, either by yourself or with your spouse (if you’re doing this together), and set some financial goals.
Decide how you want your life to progress and where you want to go.
My financial aim is to earn $100,000 per year in passive income. I established that target because $100,000 a year isn’t much money in this day in age, but it’s plenty for us to live on without someone having to work, and we can get by.
I intend to continue once we reach $100,000, but the initial target is unquestionably $100,000.
I’ve always wanted to do it before I’m 35, which is about four years away, so I’m not sure if it will happen that soon.
Say it takes me 20 years (I am now 31), I will be 51, 14 years before most people retire. Setting a time frame of five years, ten years, or twenty years is a brilliant idea because it will help you determine the best investing strategy for you.
- Choosing an Investment Strategy
It is necessary to decide on which investment strategy you want before you begin. If you are a newbie in the property sector, this will be very tough for you because you do not know what investment techniques are available for you.
I recommend reading books and reading up and learning about some investment strategies, but do this and understand that you will not decide on that investment approach.
Books can be very reassuring, but they can also be compelling, and so you read one book on one approach and think, “That’s it, I want to do that,” and then you read another book on another method and think, “No, I want to do this,” and then you chop and switch.
I believe it is beneficial to gather various strategies, learn about them, and consider your financial goals and objectives. Before you go out there to look at properties, select a method that works for you and your goals.
- Be Aware of Salesmen
If you are a beginner trying to invest in property in Australia, you are likely to come across various companies that can provide you with “investment advice” (e.g., Check out my direct property network review).
It would be best if you are careful of some of these companies because of the methods in which they make their money. They are not financial counselors (though some of them are), but they make money by charging huge commissions on the properties they sell, which is not having your best interest at heart.
- Choosing Your Investment Strategy
Tip #5 is to come up with a strategy. As I previously stated, before you go out and start looking at property, research about strategies and then determine which plan you want to pursue.
If you continually change your mind and never invest in one method, you will most likely never be proficient at it. However, if you pick one technique and figure out how to make it profitable, you can repeat the technique with future properties purchase and become successful.
It all comes down to identifying a winning formula that works for you and then milking it for all it’s worth. The sooner you can identify and commit to a successful plan, the better.
- Go And See a Mortgage Broker
I recommend that you visit a mortgage broker before you start looking at the property because a mortgage broker will tell you how much you can borrow and how much deposit you need to save realistically to buy a property.
Many of us go in thinking we need to save 5%, 10%, or 20%, but we don’t include stamp duty, solicitor’s fees, extra mortgage charges, insurance, and all the other things we overlook. Furthermore, we believe our banks have goodwill toward us, but guess what? They do not. We have no idea they won’t consider our commissions or that casual job you have.
So a mortgage broker can assist you in understanding how much you can borrow and how much you need to save to have a goal to work towards.
- Carry out your investigative Analysis
Tip #7 is to conduct some research and suburban analysis work after that. Learn how to study an area and look at a few different regions to explore.
What is the population like? Is it growing or declining?
What are the economics of the area? Is there any upscaling going on where affluent people are moving in and enhancing the area?
Doing such research and understanding suburbia dynamics and how they expand will assist you in selecting a neighbourhood that is poised for growth and increasing your chances of receiving a good return on investment.
- Obtain Pre-Approval After Researching
Tip #8 comes after you’ve done some research and you’re comfortable enough and have acquired knowledge and confidence in the market. However, you will need to get pre-approval from your mortgage broker before making an offer on a property or committing to a property purchase. This signifies that you receive approval based on the property’s worth.
This implies that if you find a house and make an offer, the time between making your offer and getting your loan fully approved will be substantially shorter. It’s a fantastic thing to do.
- Find A Team of Industry Experts
Then, in step #9, to save you time, money, stress and to help mitigate any potential risks or mistakes, find a team of industry experts to guide you through a step-by-step property investment journey.
When I first thought about investing, I thought it was easier to do it on my own. How far away from the truth I was.
This is a fantastic idea, in my opinion to fast track your success when investing in property.
So, those are some tips for a beginner looking to invest in properties in Australia. I hope that helps and gives you some ideas for making this property investing business a little less frightening.
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