I don’t know about you, but I keep hearing about how friends, or friends of friends, invested in property before they were 21, and now that they’re 25 or older they’ve made enough money off of said investment property that they’re able to invest in more properties, or even buy their own home.
Meanwhile, I’m over here, spending all my money on clothes, books, desserts, travelling and other short-term investments. The idea of putting my hard-earned money towards a long-term investment in property both frightens and confuses me. How did my friends do it? How did they make it work for them?
If you’re anything like me then you’re no doubt asking yourself those same questions, and wondering if you could possibly make it in the property investment world. While there is really no definitive rulebook to help you become a pro at investing, there are a few things you can do to ensure you don’t crash and burn in the attempt.
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This one is a no-brainer. Though I’ve often found myself asking “how are you going to do that?” when a friend has told me they want to invest in property, I’ve never actually done any research to answer that question. Yet it seems that practically anyone can invest in property, so long as they have a good credit file and a strong savings history.
If there’s one thing Gen Y knows how to do, it’s use technology. Google ‘property investment loans’ and investigate which lenders offer the best loan products and the best rates to suit your investment needs. Lendi’s online platform, and our Home Loan Specialists, can also help you with that.
Don’t be afraid to actually ask your friends, or the friends of your friends, who’ve successfully invested their money in property. What better way to know “how they did it” than to ask them how they did it. You could even ask their parents, if they were the ones to push them into investing in the first place. You could also attend seminars and courses, formal kinds of education that will help develop your knowledge and understanding of the property market and the investment world.
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Map out exactly what you want to do, what you want to achieve and when you want to achieve it by. Do you want to invest in just the one property, or is it your plan to build a portfolio and invest in multiple properties down the track? How many properties do you want to own in 15 years time? Find the price of a property through a property report.
It’s important to plan for the future, not for the immediate. While it’s good to know which suburbs are doing well now, it’s even better to know which suburbs are up and coming, and which properties are going to have a good market value in a few years. What might be attractive to renters now may not appeal to people in the future. It’s always a safe bet to start small and to build from there - invest in a one bedroom apartment first, and work your way towards a four-bedroom house once you’re more familiar and confident with investing.
It’s important that you stick to your plans once you’ve made them. Though the market can change, it likely won’t change so much that it throws your entire investment plan out the window. Don’t get in over your head, and don’t invest in something simply because it sounds too good to be true - because it probably is.
Apparently this is something Gen Y property investors often overlook, yet it’s one of the most important aspects of investing in property. There are different kinds of insurance that will protect a property investor, from Landlord insurance that will cover you should any damage come to your investment property, to loss of income insurance, that will protect you in the event that you lose that rental income.
You’re not going to be able to save enough money to secure an investment loan, or to pay off that loan, if you don’t learn how to budget. Know what you can realistically afford. Know the difference between a “need” and a “want” and only spend money on things you actually do need. Stop making frivolous purchases (do you really need that $300 coat?), and resist the urge to splurge.
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Gen Y is often accused of being too accustomed to instant gratification. For my own part, I know I become frustrated when YouTube buffers too slowly, and when it takes more than 3 days to ship something I’ve bought online.
However, with property investing, you must be prepared to be patient. You won’t see a return on your investment overnight. Be prepared for setbacks and knockbacks - you may not get the property you want, and renters may not want the property you want to lease to them.
Be prepared to pay taxes (like stamp duty) on the property you buy, and be prepared for ongoing expenses related to the maintenance of that property.
Be prepared to make sacrifices. Your savings will take a hit, but more often than not the return on your investment will be well worth it in the long run. A wise property investment can have you set for life.
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