8 Tips for successfully investing in Real Estate
Making money in real estate can be tough – the market is constantly changing, the laws are complex, and the stakes can be very high.
While there are many online tools and programs that explain how to become a real estate investor – and some have great tips on how to make money in real estate – it’s hard to know who to trust.
Whether you’re just starting out, or are looking for ways to grow your portfolio, here are our top real estate investment tips.
1. Get educated on how to invest in property – and never stop learning
As with any investment, it’s important that you do your research. If you’re a beginner, there are a range of seminars you can attend and industry leaders you can follow, like Margaret Lomas, Terry Ryder from Hotspotting, Property Couch guys – Bryce Holdaway & Ben Kingsley. As your portfolio develops, so should your knowledge and expertise – after all, there’s always more to learn!
2. Set a goal and have a plan
Before you invest you should think about what you want to achieve. Knowing your end goal will help you plan your investment strategy which, in turn, will provide a framework for all your investment decisions. A clear goal will also help you to focus on the numbers and make decisions with your head, not your heart.
3. Stay grounded and focused
It’s easy to get caught up in the excitement of rising market or buying and selling property – particularly if you score a bargain or land a large profit. While you should celebrate these successes, it’s important to stick to your plan and stay focused on your end goal.
4. Build a team you trust
As the old saying goes, half of knowledge is knowing where to find it. You can’t be an expert in everything, so it’s important to surround yourself with professionals who can help you make decisions and grow your portfolio. As real estate is usually a long-term investment, having a team of trusted advisors to regularly call on can save a lot of time and stress.
5. Be flexible in your approach
Your natural inclination will probably be to look in your local area and choose properties that you would like to live in. However, this may not be the best approach. Investing is a numbers game, so you need to step outside your personal preference and consider different locations (like regional areas and interstate) and different property types.
6. Focus on getting to your second property
According to census data, while about 8% of Australians own investment property, only 18% of investors own two or more properties. This suggests that the second property can be the hardest to acquire, even though the income and equity from the first property should help (financially, at least). Be conscious of this and aim to expand your portfolio as quickly as is practical.
7. Have a safety net
While you shouldn’t plan to fail, the property market can be volatile, so you should have a fallback plan. Real estate is a major investment and – depending on your financial arrangements – can be very costly if the worst happens. As such, it’s important you have a safety net of funds and do not overextend yourself.
8. Don’t let fear stop you
As with any investment, real estate has its risks. However, these can generally be minimised with good planning and shouldn’t stop you from taking the plunge. Don’t give in to the fear – the benefits are more than worth it.