Property Investment Guidance

“Learning is the beginning of wealth. Learning is the beginning of health. Learning may be the beginning of spirituality. Searching and learning is where the miracle process all begins”, Jim Rohn

Purchasing property might appear to be todays flavour of the month. However, because of the considerable amounts of cash changing hands, it is not something that you need without correct training and guidance.

When I first started investing in property, I spent lots of time educating myself. I purchased every single book on property that I could lay my hands on. I spent a lot of time and energy attending workshops and seminars. When I had become confident of my abilities, I ventured out and bought my first property.

Buying my first property didn’t mean that I possibly could now stop learning about property investment. In fact, it had been the exact opposite. I was now spending additional time learning the different property investment strategies; I was attending more seminars and courses and reading specialised books on investing. Had I stopped learning after my first purchase I would ‘t be a successful property investor today.

A couple of weeks ago, Used to do some investigation to determine what courses were on offer to help individuals enter property investment. Quite frankly, I was shocked through the results. I found day courses and workshops ranging from �500 to �10,000′s. And, it gets better.

I even found several portfolio companies requesting 6 figure sums to acquire an ‘off the shelf’ property portfolio! Today, every other person seems to be offering a property investing course. How can you choose which the first is best for you?

Firstly, my advice would be that you should not pay one to buy a property portfolio for you personally. If you would like success in property, you must know a minimum of the basics of property investing. Paying someone a truck load of cash to purchase a few properties for you will not provide you with this information.

Attending property courses should by definition improve your understanding of property investment. However, prior to parting with any money you have to address the next issues:

o Do you know the credentials of the course organizer? Is he/she a property investor himself and just how much experience does he/she have?

The very best person to advise you on property investing would be somebody that walks the talk – there’s little to gain from the presenter who may never have purchased a property before.

o Do you know the course contents? Will advanced techniques be addressed?

It is the advanced techniques utilized by successful property investors which will set you apart from all those other wannabe real estate investors.

o The number of individuals will be attending the course?

A course attended by countless people may lack the personal touch, but will show networking opportunities to you.

o How much and how long is the course?

Paying thousands of pounds for a eventually course is simply too much. You need to weigh up the cost, length and contents before making up your mind.

o Am i going to get the chance to network with other attendees from the course?

The property clients are a business of relationships. You have to network with other people within the same business as you will be unable to do it alone.

o What’s the location of the venue?

Is it worth traveling countless miles to a course that may be offered nearer to your geographical area?

o What support is going to be provided after completing the course?

Course attendees quite often become unstuck after attending a training course. You need to find out if any support is offered once you complete the course.

Only one time you are pleased with your answers towards the above questions in the event you spend any cash.

Be warned though, attending a training course by itself won’t cause you to right into a successful property investor. What will set you apart from any other attendee on the course is your degree of motivation and determination to achieve property investing.

Be honest….you like the idea of property investing, but struggle to do something. Running just like a business and achieving the best team can far exceed your goals and expectations….

Buying your first investment property (or third) could be a stressful process, especially because you decided to take action and want guidance for the next step.

With so many options available associated with property, it is little wonder that investors are wrongly identified as the type of property that will suit there needs. Often they begin with a property first instead of ensuring their finance is structured correctly.

Many investors never purchase greater than 3 investment properties and those that do sit within the top 8% of all investors throughout Australia. Usually the reason behind not exceeding 3 investment properties include:

1. Incorrect finance structure that limits the portfolio and does not supply the needed flexibility to develop
2. An adverse experience with a property or tenant
3. Fear of the debt accustomed to purchase an investment property

Whilst this isn’t a complete list, these 3 items can stop property investors from following through to make sure that they offer for their future.

When controling and educating investors, the important thing points which i start with to mitigate the top 3 road blocks are:

1. Finance structure
2. Kind of property and research
3. An expert team

Finance Structure

Most property investors begin by buying the home and building g equity through capital growth over time and also the principal & charges they make to their bank.

The initial step when it comes to the finance structure would be to mitigate the danger towards the family home by splitting the finance about the investment properties with separate lenders. This ensures that the household house is not cross securitised with the investment property and therefore allows the investor to manage the sale of property in the event that their circumstances change plus they cannot afford to hold an investment property.

By splitting your borrowing between lenders, you’re also lowering your exposure to an individual lender and then the risk of a change of lending policy.

The top 5 tips when it comes to a finance structure:

1. Mitigate the risk to the family home using a separate lender for that investment property
2. Separate your home loan (non-tax deductible debt) to your investment loans (tax deductible or GOOD debt) for ease of reporting and accounting
3. Ensure a valuation is finished on the purchase property and don’t use the equity in your home to pay for any shortfall
4. Only use a line of credit against your family home if you’re “GREAT” at budgeting as it is like a huge charge card and can place you into further debt.
5. Choose a lender which will re-limit the loan facilities without a fee, so when you pay down your home loan you are able to lessen the limit and boost the investment loan allowing use of “GOOD” debt for more property investment.

Rate of interest, fees and charges are always a consideration when selecting a lender, nevertheless the correct structure and flexibility should be the first priority to align to your investment goals.

Kind of Property & Research

When considering a house the three main types include houses, units & townhouses with variations of these included, with respect to the area. All property types have their benefits and critics, however each can be a wise decision to have an investor depending on their unique circumstances.

Regardless of the type of property chosen, the listed key principals ought to be accustomed to steer clear of the pitfalls:

1. Always obtain an independent valuation with a bank panel valuer to make sure that you are not paying an inflated price
2. Seek property in the medium price for that area with an maximum of $550,000 to maximise yield, capital growth and lower risk
3. When building a new property, ensure you possess a clause in your building contracts which makes the building spend the money for holding costs if the build runs within the agreed time frame
4. Understand the price of any bodycorp and ensure you factor this and rates when calculating your cash position
5. Use historical figures for capital growth and yields to benchmark the property and improve your investment

When purchasing a house there are fantastic tools you can use to benchmark suburbs, properties and statistics. They are essential tools to make sure that you are making an educated decision including RPData, Australian Property Investment magazine and PIA software.

A Professional Team

Like every business, you have to ensure that you possess a great team around you to provide the right advice and behave as a sounding board. Never let one group railroad you into using all their professional services.

You need to be comfortable with they you build, as it is a lasting relationship like any business.

Your team should consist of:

1. Finance specialist
2. Accountant/bookkeeper
3. Lawyer (property)
4. Financial Planner (insurance)
5. Property Manager

Property investment can be both rewarding and challenging offering all Australians the opportunity to build wealth. By structuring your loan, sticking to key property fundamentals and building a professional team, you will soon discover that property investing can be a strong technique for wealth.