Property Series: 5 Habits of Tremendously Successful Home Investors
Smart property investment decisions are one of the surest ways to achieve financial freedom that will last well into retirement.
But as with anything worth striving for, it (unfortunately) isn’t easy; the property market, touted by many as unshakingly stable, still possesses inherently complex & dynamic nuances required to be understood.
It’s for this reason that some of the most successful Australian property investors use diverse strategies in order to achieve large returns on their investments.
Below are just some of the habits & strategies The A Firm have witnessed in real time:
#1 Start With A Plan, Finish With Acceptance Of Risks
All investments are inherently risky and the nature of property investment is no different.
A red-hot market can suddenly turn out to be a bubble, or that stunning home with the balcony overlooking the pool could turn from a gold mine to a dud when a factory opens down the road.
It’s why it’s so important that as an investor you have a plan and stick to it. Set your budget in stone, have a nest egg at the ready, a strategy in place for negotiations and don’t second guess yourself.
But always understand the risks: if a smart investor can afford to prepare for the worst to happen, then they will, but otherwise they won’t overextend themselves.
The best investors will consult with a reputable financial expert in order to understand what risks they can and can’t afford to take.
#2 Bring The Experience Of Experts To Bear
Risks can always be mitigated or absorbed; but ideally, a smart investor will want to deftly navigate around them. This is why smart investors will consult experts in the field of property investment:
- Mortgage Brokers
- Conveyancers
- Real Estate Agent
- Property Manager
- Property Advisors
- Financial Advisor
By combining the experience & knowledge of diverse property and financial experts, a smart investor will avoid the pitfalls and dangers that could set them back time-wise or finance-wise.
Experts will ensure you make a sound investment, and greatly enhance the process of acquiring it. They will also (typically) increase the returns you make, by way of advanced strategies that going it alone would otherwise omit.
#3 Maximize Investment Income With An Accountant
For property investors, tax eats into a significant portion of their yearly income.
Moreover, tax laws can be complex and time-consuming to learn; every hour spent studying tax is an hour away from improving your understanding of the property market.
Additionally, policy updates to tax laws can be frequent, and the ATO enforces severe penalties to those investors who fail to pay the proper amount of tax.
It is for this reason that the most successful property investors in Australia don’t blink twice at hiring the services of a qualified accountant, someone who can save them tens of thousands of dollars every year in managing their property tax.
#4 They Have A Key Understanding Of Leverage
If you’re dipping your toes into the property market, it is exceptionally likely that you will be dealing with loans from the bank.
This can be a tricky mindset to inhabit: even though you’ll be owning a huge asset in the form of property, you’ll likely be owing the bank a lot of money.
This is why sharp investors go to great lengths to understand:
- Exactly how much their property is valued at
- How much they can borrow from the bank
- Whether a fixed or variable interest rate works for them
- The difference between existing borrowings and useable equity
#5 They Scout The Market
Highly successful property investors will always ask themselves if they are in a buyers or sellers’ market when looking for property.
They will also understand that the market – ever fluctuating as it is – will dictate whether the best strategy will be a long-term investment, or simply to flip the property.
A sharp investor will also take note of prevailing market conditions to better understand the true value range of their target property.
A good practice is to research the suburb you are booking to buy in, in terms of its historical capital growth rates and any planned developments in the next five years.
There are plenty more nuanced strategies that successful investors consider – in fact, you could fill a whole book with them. Or, you could make use of the combined one hundred and fifty years of experience & knowledge from The A Firms financial solutions team!
If you have any questions about saving more on tax from your property investment then contact us today!
Disclaimer: The information provided in this article is general in nature and is intended to provide a general summary only. It should not be relied on as a substitute for professional advice.