You don’t want to have to make lots of mistakes on your journey of investing in property, but here some of the lessons to look out for.
You need a plan. You can’t just wake up one morning and think ‘Right lets go buy some property’. Look at the most successful investors and see how they have done it, and try and recreate it. The bottom line is that you buy under what it is worth, in an area that is about to take off, and then make some changes to the property to add value. This has been a proven system for a long, long time. You still have to decide what cities and also what type of properties to invest in, but that will all be part of your plan.
When you have the plan, stick with it. Don’t get distracted by the latest and greatest ‘new’ way of doing things. Keep focused.
It’s more sustainable if you invest to hold. Go through all the ups and downs in the property cycles and watch the value grow. How many times have you said: ‘if only I had brought that property when I was 22, it would be worth ‘x’ by now!’
Is it a hobby or is it a business?”
It takes time and effort to master property investing. In fact the most successful investors don’t do it by themselves. You can’t know everything, we are human after all. So pay a team of good people to help you make the right decisions. If they are helping you make money, don’t be afraid to pay them. The DIY attitude is fine for some things, but when it comes to making money, paying people makes sense.
Your advisers may include, a buyers agent, a broker, a lawyer and accountant, and property investment advisor.
No, don’t do it because everyone else is:
The people who don’t understand property tend to get very excited at the peak of the cycle and buy buy buy. Then they get very depressed and pessimistic at the bottom on the cycle and want to sell. Seasoned and long term focused investors do the opposite. They also understand that property works on a cycle and that will never change. If you are a good investor you know you can win in all parts of the cycle.
There is never the ‘perfect time’:
Just like there is never a perfect time to have kids, there is never a perfect time to invest in property. There is always going to be something that comes up. Economic set backs, natural disasters, rate hikes, new taxes, or some other unforeseeable crisis is very likely to happen. If you have a short term view you only see the problems and don’t look out 20-30 years.
There is so much information available these days, that it’s no wonder we get stuck. We have to look at ‘one more set of numbers’, we have to make sure that what we do is going to be perfect – once we read this other report. Remember focus on the long-term and it should clear your head a little.
Don’t be afraid of debt
I’m not talking credit card and car payment loans. I’m talking about ‘good debt’ and using leverage to build your assets. When you can see what it will do for you in the long run it’s nothing to be afraid of. If you back this up with an ’emergency fund’ then debt need not be stressful.
There are some very smart property investors which has been the most important lesson for you?