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What would you say if I told you that if you carefully follow a pattern set forth by successful property investors, financial freedom could be yours?
At Positive Real Estate, we’ve seen thousands of ordinary people achieve extraordinary results through property investing. Our desire for this series of articles is to encourage and inspire you to overcome any roadblocks that you may be facing and achieve the financial freedom you deserve!
Successful property investors will agree that a well-crafted plan was vital to their success. This is why we encourage our clients to create a plan that fits their budget and moves them towards accomplishing their goals.
Begin thinking about what you desire from property investing. Be bold – don’t restrict yourself at this point because you’re just brainstorming. Make your dreams big!
Things to consider when planning:
- Your current financial situation. Do you need to clean up your credit or save more money?
- What is your earning capacity?
- Have you established a budget and are you following that budget?
- What is your personal risk level?
Be realistic in your assessment. For example, if you want to purchase two properties this year but you have fears that your employment may be in jeopardy, or perhaps you’re planning to start your own business, take these facts into consideration when making your plans. These life changes will impact your borrowing capacity.
Now that you know what you want, establish a timeframe for achieving your goals. Use a six month, one year and five year timeframe to ensure that you’re always moving towards accomplishing your goals.
As part of each timeframe, make a list of the 5 most important goals and/or steps you need to accomplish which will take you closer to your target.
Schedule a time – e.g. quarterly or twice per year – to review your goals. Doing so will not only keep you accountable, it will afford you the opportunity to adjust your plans as your personal situation changes.
Keys to Your Success
Know and understand what drives the markets
- Infrastructure – spending on infrastructure points to a growing economic base
- Yield variation – signals growth
- Supply and demand – indicates need in the marketplace
- Population – fuels growth in an area
- Economics – reveals clues to an area’s capacity for growth
- Demographics – influences growth – as incomes grow, so do property values
Find a good mentor
A common practice – which unfortunately is not as common as it once was – is mentoring. When learning something new, mentoring can help ease the learning curve because in addition to “textbook” knowledge, a student under the tutelage of an experienced property mentor can take advantage of the many years experience of their mentor without having to go through the experiences themselves.
Always buy with your plan in mind
First and foremost, consult your plan before making any property purchase or deciding what strategies to use. If the deal doesn’t fit with your plans, don’t be afraid to send it on to another property investor. You can never go wrong when you “pay it forward”.
Choose your strategy
Understand when and where to apply the different property investing strategies. For example, if you’re just starting out and you need to gain equity in a short time period, consider purchasing property at a discount when the market is coming off the bottom (approximately 7 or 8).
If you’re able to wait a bit longer and invest more time to gain your equity, consider strategies such as adding a granny flat, major renovations or trading.
You don’t have to stick to just one strategy – combine them when and where they can be the most effective.
Establish – and nurture relationships with – a base of solid, professional contacts
Maintain a list of professionals you can consult with for advice about a particular marketplace, or perhaps bounce ideas off of. Rather than simply compiling a list of contacts and letting that list collect dust, maintain contact with these individuals – even if it’s nothing more than a quick drink after work from time to time.
After all, nobody wants to feel like they’re simply a repository for information. The more you invest in your professional relationships, the better the returns, both intangible and tangible!
Be flexible and creative
Although you will have created an image in your mind’s eye about the kind of property you will need to purchase to realise your goals, be flexible and keep your eyes open to opportunities, which may not fit within the parameters you have set, but which will nevertheless help you achieve the results you’re after.
An example of capacity would be time. In other words, how much time is available for you to learn about and research real estate? Are you putting out lots of offers or just “one or two when you get the time”? You must devote time specifically to finding properties and learning about real estate investing – no half measures will provide you with the results you’re after!
Another component of capacity includes putting together a team who can help you achieve your goals. Rather than make investing in property harder than it is by “going it alone”, surround yourself with knowledgeable, successful property professionals and leverage their expertise whenever possible.
To achieve success in property investing you must be aware of what is happening in the marketplace. You can listen to property gurus from sunrise to sunset – and you should listen to knowledgeable professionals – however, at day’s end you must be aware of where the market is at in its cycle.
Another part of awareness is knowing about finance – how to obtain the terms most favourable to the growth of your investment portfolio.
For more of the basics of property investing, part two of our series is coming soon.