It is no mean feat to launch an investment portfolio. Using the right strategy, research, and expert guidance, you can build a highly lucrative nest egg over time.
So where should a property investor start?
Be Interested In Investing
A multi-property portfolio that performs well requires a passion for investment and an interest in growing your financial future.
Introduce a regular routine that will help you grow your investing knowledge. Staying informed on market conditions on a daily or weekly basis helps you stay current and ensures that your goals are accomplished. Commit to learning how to evaluate trends, attend investment seminars and speak to fellow investors and experts for advice.
Start Out Right
If you’re just starting out, making the right choice when buying your first investment property will help to buy those second and third investments a possibility sooner rather than later.
Your first property’s performance is the key to unlocking portfolio growth. If you buy the right property in the right area and it increases in value in 24 months, you’ll have another deposit and can get right back in the market again.
Know Your Why
It’s crucial you know why you’re building a portfolio in the first place. If you identify the reason you’re choosing to build a multi-property portfolio along with your financial arm lifestyle goals, it’s much easier to create a plan to work towards them.
Portfolios should be tailored ideally to your level of income and future financial goals. Once you know what you’re aiming for, then you can take the required action to achieve it.
Select Suburbs Carefully
Choose the area you will be investing in carefully. Growth suburbs are always an investors’ best friend. So look for areas that have at least doubled in the past 10 years.
Lifestyle suburbs close to public transport, good schools and easy access to shopping are always popular with the majority. You should also consider up-and-coming areas with predicted growth and planned infrastructure that will be highly sought-after.
Aim For The Best
Selecting the right property is one of the most important factors to a successful investment portfolio. Make sure the property is re-saleable and has a minimum risk of rental vacancy.
Other things to consider are
- Purchase below the median price, allowing room for the property value to grow
- Aim for at least 9% capital growth and a rental yield of 8% per year to cover all property-related expenses
- Look for a property that has an average of under 30 days on the market – as this can determine a property that sells.
Expand Your Portfolio Strategically
If your first investment property is performing well, and you’re in a financially secure position, then it’s time to consider adding another property and start building your portfolio.
Rather than focusing on the size of your portfolio, it’s better to focus on the performance of your properties.
With strategic investing, you can easily acquire four properties that give you the same result as 10. It’s all about selecting high-performance properties.
Diversity To Lower Your Risk
In order to spread the risk and performance outcomes, set up a long-term focused, diversified portfolio with properties in both city and regional areas. You should also look at buying properties in a variety of states or territories, to help alleviate land tax burdens.
Build a Support Team
Smart investors know to seek out help from those who are experts in their field. Align yourself with an experienced financial advisor, an accountant who specialises in property investment and a trusted mortgage broker. Develop relationships with buyer agents around the country to help you find the best deal possible. Choose a Client Relationship Specialist that has the skill and market knowledge to manage your property portfolio.
Learn and Move On
It’s quite normal for investors to occasionally make mistakes when building long-term wealth. The most important thing is to learn from any setbacks and to keep moving forward.
Never be afraid of having to sell. Remember that getting rid of one bad investment in order to acquire another that will increase in value is sometimes necessary. And often you can make up the loss over the next 12 months.
Setbacks do happen and that’s why it’s always important to align yourself with like-minded professionals who will support you and give you the right advice.
Be Patient
Successfully investing in a property portfolio takes time. If you remain dedicated to investing for the long-term, keep consistent with your wealth-building strategies and
Most importantly, staying educated, and then building a portfolio will eventually pay off in the long term.