How to Invest Successfully in any Market

There is some incredible value available in the Australian property market right now and with interest rates currently below 6% – and tipped to fall even further – there’s never been a better time to add to your portfolio.

If you’re keen to take advantage of the opportunities that abound, follow these tips for buying success:

  • Build a team of experts to support you

You can’t be an expert at everything and when buying property, you are dealing with big dollars. Therefore, finding the right experts to support you – including a solicitor, accountant, finance broker, property coach/mentor, property manager, valuer, quantity surveyor and insurance broker – is crucial for your success.

  • Work out your borrowing position

Knowing your borrowing position (and what you can do to improve it) helps you to plan and work out the type, number and profile of the properties that you can afford to buy. At this time, get the ball rolling with your finance application so that when you find the right property, you can act swiftly.

  • Establish the right buying entity

Just as important as what you plan to buy is how you plan to buy it. I’ve seen investors spend tens of thousands of dollars to move assets from personal names into trusts for asset protection and wealth creation purposes – avoid making the same mistake by consulting your accountant for advice before you buy.

  • Fine-tune your investment strategy

Fine-tuning your investment strategy allows you to move forward with confidence and in the knowledge that your investing decisions will not adversely impact on your lifestyle. Consider: how much can you afford to spend on your property purchase? Are you going for a negatively geared capital growth asset, a neutral investment, or a cashflow positive property? Do you plan to buy and hold, or renovate and sell?

  • Establish your buying rules

Buying rules help you focus your search on properties that fit your investment strategy. You should cover the basics: where to buy, how much to buy for, why this property, and how does this purchase fit within my overall investment strategy?

  • Find the right property

I could write a book on this subject (that’s right –I have!) so all I’ll say here is: research, research, research and more research. And talk to property managers to find out what real tenants really want!

  • Crunch the numbers

Remember the property investor’s golden rule: “Fall in love with the deal, not the property”. In order to do this you will need to analyse the property financials – including confirmed rental income/potential, verified by independent property managers – along with ongoing ownership costs and mortgage expenses to ensure the property is aligned to your buying strategy.

  • Negotiate the price

This is where you make your profits, as the money you save as a result of your negotiations is money in your pocket. As a guide, seek to achieve a 5-10 % discount in a booming market, a 10-15 % discount in a flat market, and a 20%-plus discount in a bust market.

  • Organise inspections

Building and pest inspections are an important part of conducting your due diligence: they not only allow you to ascertain the true condition of the property, but they can also give you leverage in negotiating the price down.

  • Finalise ownership arrangements

Once the contract has gone unconditional, you can arrange appropriate levels of insurance (building, contents and landlords insurance policies), and appoint a property manager to look after your investment on your behalf. This is also a good time to organise a tax depreciation schedule so you are maximising all the tax deductions that are available to you.

Of course, there’s much more to buying a quality property asset than following a few simple steps. Investing in property means taking on a large financial responsibility and it’s all-too-easy to make costly mistakes. For a full guide that walks you through the step-by-step process of buying the right property for the right price, consider investing in The Green Book.

Remember, educating yourself is absolutely crucial if you want to get ahead in the property game. If you continue to learn, surround yourself with positive like-minded people, keep focused on your goals, and your journey towards real wealth will be that much faster.

Yours in successful investing,

Helen Collier-Kogtevs

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