Hi all
Seen a lot of posts here where people are just starting and not know how to start.
The suggestion I have is: work out what goal you are trying to achieve and the strategy first, before you even look at the first property.
Basically it works like this:
1. Work out what are you trying to achieve with buying properties. The reason is because your goal will directly impact the strategy you need to use.
For example, someone who is trying to obtain tax benefit by going negative gearing would use a very different strategy than someone who is trying to replace their job income with passive income from rental properties. So before you even start to browse at “this 3 bedroom house near a train station” or “that townhouse close to CBD” or anything….
Work out your goal first.
2. Once you define your goal and the associated strategies, then work out which area to invest in.
Some areas are suited for one type of strategies but not others. Some areas might be excellent for “do up sellers”, while other areas might be better suited for “buy and hold”, and some other areas might be better for subidivisions, etc…
Also, your finance situation will influence which area you need to look at as well.
So choose an area that suits your strategies. Don’t invest in an area “just because it is geologically closer to where you live”
3. Once you have found a few areas that can suit your strategy, then start looking for specific properties that suits your requirement.
4. NEVER (and I say with capital letters, NEVER) buy based on emotions. Don’t rush in just because everybody else is rushing in. Only buy if the purchase makes sense from a number point of view.
Problem with most people who buy properties is they do this in the complete opposite direction… that is they don’t define their reasons to buy, they don’t work out their goals, and they don’t think about strategies… they jump into looking at specific properties straight away and end up buying the wrong investment properties. This kind of mistakes cost beginner investors tens of thousands of dollars down the track and takes years to recover.
Nice one Steven !! Your last words are so true:-
This kind of mistakes cost beginner investors tens of thousands of dollars down the track and takes years to recover.
One of my favourite maxims comes to mind – “If you think education is expensive, try ignorance”. Your post helps all new investors to avoid the earliest part of that trap. More to know of course, but that post of yours is a great start. :)
Benny
4. NEVER (and I say with capital letters, NEVER) buy based on emotions. Don’t rush in just because everybody else is rushing in. Only buy if the purchase makes sense from a number point of view.
Sadly, most of us investors learn that one the hard way, it is possible to avoid altogether with the right guidance from a reputable mentor.
Soundpost for a newb to read, digest and apply.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
Soundpost for a newb to read, digest and apply.
Actually, one thing to add in.
The first step I mentioned to “work out your goal”.
I mentioned this is due to the strategy would be different depending on the goal. This is a “technical reason”.
There is also another reason that I would like to add in. This is more of a “psychological reason”. That is during the process of making investments, everybody is guaranteed to make a mistake here or there, and some of those mistakes can be discourage. Everybody is also guaranteed to run into difficulty situations. Some people give up because of that.
But if there is a “strong reasons” defined, or a goal that is strong / attractive enough for you to look forward to, then this will increase the likelyhood that you will get back on your feet and continue to learn and improve, rather than giving up.
Thank you . Good one for a start
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