If you’re ready to swap smashed avo and craft beer for a property portfolio, knowing where to begin can be daunting, especially if you’re the first among your friends to dive into property investing. Here are six tips to give young investors an edge in a market often dominated by experienced Baby Boomers.
- Be Realistic About Your Abilities
Renovations are trendy, thanks to reality TV shows like The Block. But can you realistically manage a renovation along with your job commitments? And do you think you can handle the paperwork, repairs, and tenant relationships yourself, or should you hire a property manager? Youth often brings a blend of naivety and confidence, which can be advantageous but can also lead to overcommitment, costing you time, money, and stress in the long run.
- Educate Yourself
Today, much of the information needed to make smart investment decisions is readily available online. However, you need to educate yourself about creating your own investing strategy. Ask yourself why you want to invest, what your goals are, and how investing in property will benefit you. These questions can help clarify your path forward and inform your investing decisions.
- Talk to Real People
While the internet is a great resource, it can’t replace the insights gained from speaking to experienced property advisors. They understand the growth drivers in specific areas that lead to long-term capital growth and can provide valuable demographic information about likely purchasers and tenants. This can influence the type of property you buy, where you buy, and the features you prioritise, such as a secure backyard, ample parking, or proximity to public transportation.
- Look Further Afield for Bargain Properties
“Rentvesting” has become a popular strategy, where individuals rent in expensive cities and invest in more affordable suburbs or towns. Instead of limiting yourself to your local area, consider properties elsewhere that may be cheaper, offer better rental returns, or have greater potential for capital growth.
- Save, Save, Save
Don’t rush to make offers the moment you’ve saved a deposit. You’ll also need funds for other buying costs such as stamp duty, building and pest inspections, and a buffer for unexpected expenses. Once you’ve purchased the perfect investment property, ensure you have the cash flow for ongoing expenses like strata fees, water, council rates, insurance, and a slush fund for regular maintenance and emergency repairs. Set up a regular direct debit to a high-interest savings account at a different institution each payday. This habit will set you on a path to excellent money management and financial security.
- Get Sound Financial Advice
While well-meaning, your Uncle Larry might not be qualified to advise you on finances. His best intentions could cost you if you face a hefty tax bill or miss out on deductions. Mortgage brokers, accountants, and financial planners have specialised knowledge in their areas, but they might not be experts in property investment. Seek professional advice from an independent property advisor to ensure you make informed and beneficial decisions.