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The Investment property - Strategy and goals session
Without goals, you have no direction and without direction, you have no strategy.
When it comes to investing in property, having a guide to property investment and a buyer's agent on your side can be extremely helpful. They can help you navigate the process, find the right property for your needs, and make sure that you're getting the best possible deal. However, it's important to remember that a buyer's agent is only as find you a property based on your brief. You need to have a clear idea of what your goals are, what you're looking for in an investment property, and what you're willing to sacrifice in order to achieve those goals. It's important to have goals when investing in property because, without them, you'll have no direction and no strategy. Furthermore, if you're not clear on what you want to achieve, you may find yourself wasting time and money on a venture that doesn't go anywhere.
When you're looking to invest in property, it's important to have specific goals in mind. This will help you to stay focused and avoid getting sidetracked along the way. Here at Levoune buyers agent, we do a goal and strategy session for our clients as part of our full buyer's agency service. This helps to ensure that our clients know exactly what they want to achieve and how we can help them to get there.
Getting Started in the Australian property market:
Are goals really that importants?
When getting started in the property market, it's important to have a clear plan in place. This includes identifying your goals for investing, as well as researching the Australian property market to find the right property for your needs. It's also crucial to have a budget in mind so that you don't overspend on your investment. One of the best ways to get started in property investing is to work with a buyer's agent. They can help you find investment-grade properties and assist with negotiations, saving you time, money, and stress along the way. You need to be clear about your goals, what you're looking for in an investment property, and what your budget is so that you can work together to find the best property for your needs. Whether you're new to investing or are a seasoned pro, it's important to have clear goals in mind before making any rental property purchases. These goals will help you determine the right type of property to invest in, the right investment loan what your budget should be, and what you can afford to give up in order to achieve those goals. With a clear plan and strategy in place, you'll be well on your way to success in building a property portfolio.
You do not need to sacrifice Rental income to get Capital growth.
Cashflow vs Growth
You can have your cake and eat it too. When you do real estate investment a lot of property investors are only interested in the Capital Growth of their property. They are not looking at the total return on investment and normally look at it from a short term perspective. The successful property investor understands that the key to a successful investment lies in having a property with high Capital Growth AND good rental returns. By strategically investing in both these factors, you can create a property portfolio that will set you up for life.
It's important to remember that you don't need to sacrifice one for the other when investing in property. By carefully choosing properties that have a high potential for both Capital Growth and strong rental returns, you can build a profitable portfolio that will provide you with long-term wealth and security. However, there are many different strategies you can use to maximize your investment return and get both Capital Growth and Rental Income from your investment property. By using data, trends and analytics we can help you make the best decision for your portfolio.
Using data is an important way to help you make the best investment decisions for your buying a property. By analyzing different data points, you can see which areas are growing, what the trends are, and where there is potential for Capital Growth. This data can help you make informed decisions about which properties to invest in and how to maximize your returns over the long term.
To help you build goals consider:
1. Location: Where do you want your investment property to be located? Do you have a particular area in mind, or are you willing to consider properties interstate or offshore properties? Interstate properties can be more challenging to manage, but many investors find them attractive due to the higher potential for a return on investment.
2. Budget: How much money can you afford to spend on a property? Do you have a particular number in mind, or are you willing to consider properties that are a bit more expensive?
3. Size: How many bedrooms do you need your property to have? What about the size of the living spaces and yard? Is there anything else that's important to you when it comes to size?
4:Borrowing Capacity: How much can you borrow? What will your repayments be? Will you be able to afford them comfortably?
5. Return on Investment: What are your goals for your return on investment? Are you looking to make a lot of money quickly, or are you happy to wait a bit longer?
6. Time frame to achieve goals: When do you want to achieve your investment goals? How long do you have to achieve them? Are you willing to wait longer if needed, or do you need to see results fairly quickly?
7. Mentor: Do you have a mentor? A mentor can be extremely helpful when it comes to setting goals, and strategies and achieving success with property investing.
8. Passive income number: One of the best reasons to invest in property is for passive income. What is your number? How much do you want or need each month or year just from your investment properties?
9. Number of properties: How many properties do you want to own? Is there a particular number in mind, or are you happy to keep buying properties until you reach your goals?
10. Risk Appetite: What is your Risk Appetite? Are you willing to take on more risk for the chance of higher returns, or are you happy to play it safe and go for properties with lower risk but potentially lower returns as well?
Passive income Vs Number of properties
Quality over Quantity
The number of properties you have in your portfolio is not as important as the quality of those properties and the rental income they generate. It's important to be realistic about what you can afford, and focus on building a portfolio in property that will provide strong returns over the long term. While some investors choose to focus on a smaller number of properties, it's important to remember that quality is more important than quantity when it comes to building a successful portfolio in property.
Whether you're interested in building a passive income through rental properties or are looking for a more active approach where you manage your own properties, the key is to focus on the quality of the properties you invest in and how they can help you meet your financial goals. With a smart investment strategy and a bit of patience, you can build a profitable portfolio that will provide you with long-term wealth and security.
When it comes to setting goals, it's important to be realistic about what you can afford and the time frame you're working with. When you come up with your passive income number, consider how you will achieve that level of income, and what additional expenses or costs might be involved. Whether you're looking to build a large portfolio of high-yielding rental properties or are focused on creating a passive income through a small number of high-value investments, the key is to take your time and focus on quality.
Pay your PPOR Faster (principal place of residence)
Did you know could pay your house of quicker?
Do you want to build a portfolio of properties or do you just want to pay off your PPOR? As we guide to property investment you may not want a lot of properties or passive income and pay off your principal place of residence faster. Paying down your mortgage as quickly as possible is a great goal to have, and there are a number of different ways you can achieve it. One option is to make extra payments on top of your regular repayments, which will help you pay off your loan faster. Another option is to refinance your loan to a shorter term, which will reduce your interest costs and enable you to pay off your loan more quickly.
But what if buying an investment property could half the time it takes to pay off your mortgage and you have it paid off in 5-10 years! If you're looking to pay off your mortgage as quickly as possible, investing in property is a great option. By using the rental income from your investment property to make extra repayments on your loan, you can halve the time it takes to pay off your mortgage and be debt-free years sooner. Another option is to use the capital growth on your investment property to sell it and pay off your PPOR in a shorter time frame. This can be a great way to get ahead on your mortgage and own your home outright sooner. By investing in a quality property that will appreciate in value over time, you can use the proceeds from its sale to pay off your mortgage and become debt-free years sooner than you would have if you'd just kept making your regular repayments.
History Says
Assuming real estate investors purchases a property that meets their goals and falls within their risk appetite, on average that property prices will grow in value by 7% per annum. While there are no guarantees in the property market, this growth can help your investment portfolio steadily increase in value over time, providing you with a valuable source of wealth creation. While there are no guarantees in the property market that property values will increase, historical data shows that property can double in value every 7 to 10 years. This growth can help your investment portfolio steadily increase in value over time, providing you with a valuable source of wealth creation.
What is my property investment strategy?
There are a few different property investment strategies that you can choose from. The most common ones are:
- Buy and hold: this is where you buy a property and hold onto it for the long term, eventually selling it for a profit
- Buy and renovate: this is where you buy a property that needs some work, renovates it, and then sell it for a profit
- Flipping: this is where you buy a property with the intention of selling it quickly, often at a higher price than what you paid
- Wholesaling: this is similar to flipping, but instead of buying the property yourself, you act as an intermediary between the seller and buyer.
- Development: this is where you buy a property with the intention of developing it, either by building on it or subdividing it.
- Buy and hold with options: sometimes referred to as "buying to lease", this is where you buy a property, rent it out, and then later sell the option on that property.
- New vs old: this is where you decide whether to buy new or old properties. New properties generally are not investment grade properties, while older properties often can be investment grade but they generally do need work.
What property is the best to invest in?
Postive or Negative Gearing:
The most common way to make money from an investment property is through positive gearing. This is where your rental income is greater than your expenses, such as your mortgage repayments, insurance, and council rates. The excess cash flow can be used to pay down your loan faster or reinvested into another property. Negative gearing is where your rental income is less than your expenses. This means you will need to make up the difference from your own pocket. While this may seem like a bad idea at first, negative can be a powerful tool to help you grow your portfolio quickly. The tax deductions that come with negative gearing can offset any losses you make on your investment, and the capital growth on your property can help you make a profit in the long run. There are pros and cons to both positive and negative gearing when it comes to property investment. On the one hand, positive gearing can help you build wealth more quickly by allowing you to use your rental income to pay off your mortgage faster. On the other hand, negative gearing allows you to reduce your taxable income, which can be beneficial if you're in a higher tax bracket. It all comes down to what works best for your situation.
Investment properties - What is investment grade?
When buying Investment-grade property, you need to understand what makes a property investment grade. This is a designation that is given to a property that has the following characteristics:
1. The property is in an area with high capital growth potential. This means that the property is located in an area where there is a high demand for properties and prices are steadily increasing.
2. The property is located in an area with a strong rental market. This means that there is a good demand for rentals and that the properties are typically occupied for at least most of the year.
3. The property is in good condition and not in need of major repairs or renovations. This means that you won't have to spend a lot of money on repairs or renovations once you purchase the property.
4. The property has features that will make it attractive to potential tenants or buyers. This means that your investment property might have a spacious kitchen and/or bathroom, for example, or that it is located close to public transportation and/or shops.
5. The property has cosmetic renovation potential. This means that the property might need some cosmetic work, but nothing that would require a major renovation.
6. The property is being offered at under market value. This means that the property might sometimes be offered at a below-market value, or at an above-market value but with the potential to increase in value after the renovation and/or improvements.
7. The Property is not in an investor's suburb. An investor's suburb is an area where there are a lot of properties that are being bought and sold by investors. These areas tend to have lower capital growth potential and higher vacancy rates.
8. When buying an investment-grade property, there should be pressure on the current market you are looking at to purchase. This pressure may be from first home buyers, PPOR buyers, downsizers or other types of buyers.
But I know the suburb next to me is booming.
Don't follow the herd
Just because a suburb is booming doesn't mean that it's automatically an investment-grade suburb. In fact, many of the suburbs that are currently experiencing a lot of growth are actually not investment-grade, since they are typically occupied by the majority of investors rather than other types of buyers, such as families or first-time homebuyers.
You may think you know a suburb, but you can buy the wrong investment property in even the best suburb. Not all property markets are the same and there can be big differences in values, rental demand, prospects for future growth, and even the type of tenant that will be interested in the property. All property markets grow at different times and for different reasons, so it's important to do careful research before investing in any property.
When real estate investing and you buy at the right time, in the right suburb, in the right state, the right type of property, and in the right location, you can create a solid investment property that will grow in value over time and provide consistent rental income. However, buying an investment property is not a "set and forget" proposition. You will need to monitor the market, keep up with maintenance and repairs, and be prepared to sell when the time is right.
I'm buying an investment property but I never thought of an exit plan
What are my exit strategies?
Your exit strategy is one of the most important aspects of your strategy. You need to have a clear idea of how you plan on making money from your investment, whether that's by selling it at a higher price, refinancing it, or renting it out. What happens if the property market tanks and I can't sell my property?
This is a question that all investors should ask themselves. You need to have a contingency plan in place in case the worst happens. This could involve either holding onto the property until the market recovers or selling it at a loss. You should also have a clear idea of any ongoing costs that you will be responsible for and how to cover them if necessary, such as property taxes or mortgage payments.
An exit strategy is an important part of any investment, but it's especially important when it comes to investing in property. There are many different factors that can influence the value of your property, so it's important to have a solid understanding of these factors and take them into account when planning your investment strategy. With the right research and planning, you can create a profitable portfolio that will help you achieve your financial goals over time.
Don't Forget
Don't forget while crucial factors favouring investing in residential property, you need to way up to entry and exit costs, tax deductions, borrowing and maintenance costs, rising interest rates, property expenses, mortgage repayments, property management company fees, property tax, land tax, legal fees, landlord insurance, investment property loan, tax deduction, ongoing taxation benefits and any other costs that you might incur. You need to work with property managers as they are local real estate agents It's important to consider these factors as well when weighing up whether to buy an investment property and get good property investment advice. As in most local real estate market, with median house price growth, property prices rising straight, rental property shortage, net investment income increasing and other ROI factors, the property is a physical asset that can be bought, hold or sell at a good price. You can buy the wrong property but know what are the best property investment strategies to help you choose a good investment property, be prepared for maintenance and repairs, and have contingency plans in case the worst happens.
Buyers Agents can help
Buyers agents are licenced real estate agent, our aim is to help you save money, time and stress when buying an investment property. Get a steady income stream, and a professional property manager to help you. Help you positively gear instead of negative gearing.
Should I get a property manager?
Can you afford to not use a property manager?
While it is not essential to have a property manager(real estate agent), they can be a valuable asset if you don't have the time or knowledge to manage your investment property yourself. A good property manager will be able to help you with everything from finding tenants and dealing with maintenance issues, helping get a steady rental income stream, to handling rent payments and other property-related tasks. Whether or not you choose to have a property manager will depend on your personal circumstances and what works best for you. Ultimately, the decision is up to you, but it's important to carefully weigh all the pros and cons to determine whether a property manager is a right choice for your investment property. With the right research and planning, you can create a profitable investment portfolio that will help you achieve your financial goals over time.
Property investors will have to pay property management fees and some commissions, but you will be freeing up time and energy that you can use to focus on other important aspects of your investment. These fees are tax-deductible and will offset your cash flow. If you decide that a property manager isn't right for you, there are many other things that you can do to support your success as an investor. Whether it's learning more about the local market or seeking advice from experienced investors, there are always steps that you can take to improve your chances of success.
Mortgage Broker or a Bank direct?
When it comes to applying for a mortgage loan, you may want to consider getting help from a mortgage broker. A mortgage broker will be able to review your finances and offer recommendations on how to improve your borrowing capacity or get the best deal on a home loan. They can also help you get an investment loan, compare interest rates, principal and interest loan vs interest only, Fixed rate loan or variable, borrowing costs & handle the paperwork and submit applications on your behalf. While it's not essential to use a mortgage broker, they can be a valuable asset if you're not sure where to start or what type of loan would be best for your needs. If you do decide to use a broker, make sure to compare their fees and services before making a decision. Not only property investors, but banks themselves provide loan services as well. A mortgage broker doesn't work with one bank, they work with multiple. This allows them to get you the best deal on your home loan and makes the process of securing a loan easier for you. By comparing interest rates, borrowing costs and other factors, a mortgage broker can help you find the right home loan for your needs. They also can help you use property leveraging equity to buy another property sooner. This is a key strategy that can help you grow your portfolio quickly.
Be wary of spruikers
But I get all this depreciation, they said its the best point of buying new
These are real estate marketing companies that sell new or off-the-plan property stock. While there are some reputable spruikers out there, many of them are not. It's important to do your research and be aware of the risks before you sign any contracts. Spruikers often use high-pressure sales tactics to get people to invest in property without fully understanding the risks involved in property investment. They may promise high returns and fast profits, which can make it difficult to resist their offers. New properties generally don't perform as well as established properties, so it's important to look at all the facts before making any financial decisions. However, these promises are often unrealistic and you could end up losing money in the long run if you're not careful. Before investing in property with a spruiker, it's important to understand your financial goals and the risks involved.
Buyers' Agents Don't Have Stock
Depreciation: Ins & Outs
Many people think of depreciation as free money, but this is not the case. When you sell a property, you are required to pay back the depreciation that was claimed during your ownership period. This can be a large amount of money and it's important to be aware of this before making any decisions about property investment. While depreciation can be a useful strategy for some investors, it's important to do your research and understand the risks involved before getting started. To maximize your chances of success as an investor, it's essential to plan carefully and set realistic goals that you can work towards over time.