5 tips to building a property portfolio on an average income
The huge majority of property investors in Australia have 1 or 2 properties. If your aspiration is to help build financial freedom through properties and you’re on an average income, you can still achieve exceptional results and build significant wealth – if you adopt a systematic approach and invest wisely. Here’s my 5 top tips to building wealth wisely:
1. Make the First Step Count
Many first time investors don’t make the ideal first purchase. Some end up paying out more money each month on expenses related to their investment property which impacts on their cashflow and can stop them from affording another property.
So, it’s important to select your first investment property with the end in mind. This means buying an investment property which sets you up for buying another investment property and one which puts more money in your pocket and increases your asset valuation. If you’re worth more on paper, and if you have positive cashflow, then you are building wealth and this will be viewed positively by lenders.The specialists in property investment
Generally it helps to buy a property you can easily afford that has improvement potential and that is in a stable area. If you don’t take this first step, then all of the following steps will be difficult for you and may prevent you from investing further.
2. Leverage The Equity Growth You Have
If you already own a property that has equity growth, then you can speed up investing in property by leveraging the equity you have in your properties. Tap into the wealth of your portfolio and use it to buy more property. For instance, if you buy a property for $300,000 and assume it goes up in value to $400,000 then you effectively have $100,000 in equity in this property. You can only access this equity by selling your property or borrowing against the equity. duplex property investment
Using your equity means that you won’t need to draw on your own cash savings to buy into property. The deposit is paid for from the equity of your previous properties. The essential learning here is that your ability to grow your portfolio is determined by the equity you have grown in your portfolio – which is why it’s critical to invest in properties that increase in value quickly, ideally buy below market valuation.
3. Create A Positive Cash Flow
Do not over extend yourself on your loans or buy property that will cost you money each week – unless there’s a good reason. One of the main reasons people don’t buy more property is that they simply cannot afford to make the repayments on the property. Buying property that COSTS you more money each week, limits the amount of property you will be able to afford. property investment firm
Instead focus on creating a positive cash flow in each of your investments. Aim each month to get cash in your bank account after property expenses, this is money you can use to reinvest or spend.
The simple fact is that if you purchase, and continue to purchase positive cashflow property then you will be able to pay your loans and you will be able to afford more property. Buying positive cashflow property increases your disposable income.
Without cashflow you cannot afford to buy and own property. Increase your cashflow and you can grow your property portfolio.
4. Increase The Value Of Your Properties
Whether it is doing minor or major renovations developing property, find ways to increase the value of your property and this will increase the speed at which you can buy more profitable investment properties. Without increased equity, you will need to save money for deposits to buy additional investment properties and this is tedious and takes too long – so buy knowing you can add value quickly. property buyers agent
5. Have an investment strategy
If you want to be a multi-property investor and create financial freedom through property then you need to have a plan – an Investment Strategy.
Not every property is a good investment, and many people just go out and buy property without a second thought as to what their long term investment plan is. They just hope to make money.
If you want to buy more property than the average investor then you really need to have an investment strategy and plan out how you will reach your end goal.
This means understanding the specification of the properties that will build your wealth, assessing project feasibility, selecting deals that contain value and quickly and easily finding positive geared properties, undervalued properties, properties that need renovations and even desperate sellers who may be willing to negotiate a good price or good terms.
A buyers agent can guide you through the process and create an Investment Strategy tailored to your needs. This does come at a cost, but the benefits far out weight the cost. Would you invest $10,000 to make $100,000? I have and it steered me into a great investment opportunity and enhanced my knowledge and ability to invest confidently.
Ready to take your property portfolio to the next level? Contact us to arrange a free 30 minute strategy session, get clear on your goals and discuss how we can help you to build your wealth through property.