For the majority of us, we’ve all considered investing in property but may not know where to start. Our goal at Wise Guru is to ensure that our clients are educated and empowered to make informed decisions when it comes to investing. As a result, we’ve put together our top 6 steps to get started in building your investment property portfolio today.
1. Take a Financial Snapshot
If you’ve not already done so, create a budget outlining your income and expenses each month as well as your own personal balance sheet. This should list your key assets and your liabilities to allow you to calculate your net worth. This will give you a clear idea of your current position and allow you to make a more informed decision when it comes to determining how much you can and should invest in your first investment property.
2. Discuss and Agree on Your Strategy
If you’re looking to invest in property with your partner, family member or friend, it’s important that you have an agreed-upon clear and transparent investment strategy. Discuss and agree on what it is that you’re both looking to achieve. Is it to create a retirement income in future? it is to provide a future income for your children / grandchildren? Are you planning to build up a property portfolio or simply purchase one? A property purchase can be a major decision for many so it’s important that we rule out as many potential surprises as possible in future.
3. Get a Pre-Approval From the Bank
It is often a good idea, particularly as expats or Singaporeans living outside of Australia, to work with a mortgage broker to get a pre-approval from the bank. This will outline how much the bank is prepared to lend you based on your current financial position. This may also flag some key steps that you need to take such as reducing your credit limits on personal cards that you may have or clearing out other outstanding personal debts.
4. Leave the Emotions at the Door
Far too many people consider investing only in areas that they would like to live. This could be for a whole range of reasons from it being somewhere they’d studied in the past, where they grew up or the fact that it might be near to a beach they might like to live near one day. Allowing these emotions to drive your investment decisions very rarely leads to a positive investment outcome. It’s important that you separate where you might like to live and where to invest before proceeding to invest in property. Just because you want to live somewhere does not mean that a tenant does, nor does it mean that the capital value is going to increase.
5. Structure Your Finances Appropriately
One of the many great aspects of property investment is that it allows us to utilise leverage with a non-mark-to-market asset. It’s important that you structure your loans correctly to ensure that you are maximising the benefits of the Australian tax system and are not setting yourself up for failure in the future. There is an array of considerations when it comes to your financing including; fixed or variable, offset accounts, redraw facilities, equity access loans, interest-only, principal and interest and many more.
6. Learn From Others
Investment experience in life is often expensive, which is why it’s often a great idea to learn from the experience and mistakes of others. Seek the advice and expertise from those who’ve achieved what you are looking to achieve. An external adviser will keep you focused and on track to achieve your financial goals, ensuring that you avoid the ‘get-rich-quick’ traps and speculative investments that will only end in disaster. It’s important that your external adviser is not restricted to certain areas or types of properties as this may lead to biased advice.
We hope you find these 6 steps helpful in starting out on your property investment journey.
To Your Property Investing Success!
Wise Guru is your expert adviser based here in Singapore for investment in Australian property. We work with expatriate clients to provide a complete, tailored concierge service for each of our clients from finding the right property based on your own situation, projecting and managing your cash flows, structuring and arranging your financing and working with a team of professional settlement agents and property managers to ensure your property is tenanted, saving you time and money.
Book your complimentary consultation with our team here.
Related Tag: Real Estate in Australia