While the property sector would have you think that property investing is easy or simple and anyone can do it, the evidence suggests that not everyone does it well, let alone successfully.
Have you ever had clients who have attended investment seminars and been sold some amazing property opportunity/strategy for wealth creation, or bought from project marketers and property spruikers, only to have their property valuation come in under the purchase price at a settlement? Or worse, they bought years ago, and in the hope of continuing to invest, they seek to access equity in their property, only to find out during the course of it being valued that it hasn’t grown at all or it now has negative equity?
This doesn’t bode well for the buyer, and it certainly doesn’t bode well for the broker or lender who wants to help investors to keep growing their portfolio. In some cases, where third parties refer clients to these project marketers and spruikers to make a ‘healthy’ referral commission, the consequence for the clients can be devastating. The referrer can unknowingly burn them in the process and limit their ability to grow their portfolio down the track.
There are numerous reasons for this, but let’s start with the basics required to enable investors to buy property that will outperform the market.
When taking the steps to buy investment property, investors should understand:
1. Free advice isn’t free. It’s important to differentiate between unbiased and independent advice versus free advice that is biased and doesn’t represent the buyer’s best interests
2. Investors need to know and understand their personal risk profile and that of t he property they are considering purchasing to ensure the two are compatible
3. Investors need to develop a documented investment strategy to encompass their risk profile and medium- to longer-term goals
4. Engaging a team of experts at each step along the investment journey, including the services of a savvy mortgage broker, will reduce risk while accessing expertise in what is a complex process
5. Substantial independent research is needed to ensure investors are buying a property where the growth drivers indicate the greatest opportunity for capital growth
6. Each step of the selection, assessment and negotiating process can make or lose an investor thousands of dollars, so skills need to be honed in these areas
7. Once a property is purchased, it needs to be reviewed and assessed annually to ensure it is achieving the required level of performance to fulfil the investor’s strategy. It’s not wise to buy on a ‘set and forget’ basis and then hope it works out
By understanding and implementing these steps, investors have the greatest chance of mitigating risk and investing successfully in property that will outperform the market over time.
Each month, I will expand on these steps in more detail. Until then, go forth and prosper!
Unlike most property advisers, Miriam is an accredited property investment advisor, licensed estate agent and REIV member and award-nominated buyer agent, with 14 years of real estate experience in two states. She is also the author of the book Property Prosperity.
Miriam excels at identifying high-performing property and strategically building a client’s portfolio with high capital and income growth assets, while protecting them in the process. She is also a passionate advocate of fair play for all and complete accountability and transparency in the real estate industry. She has a strong track record of helping investors and home buyers, and believes unbiased education is the key to empowering people on their journey to achieving their goals.
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