This is a question I hear a lot when I discuss our property portfolio with friends but before we go into the details we must remember some very valuable advice that John Fitzgerald from Custodian Wealth Builders gives us.
To be a successful investor we need to be 3 things
If you think of the opposites to all the above and if you fall into any of those categories then you may have to start asking yourself a very important question – “Do I have the right mindset and approach to be an investor? Having said that I remember when my wife and I were just getting started and at social events I would be like a rooster in the hen house who just found something wonderful to eat. Id be crowing about how wonderful property investing was and telling everyone that they should get into it but was amazed of the negativity of some people as they would tell you every reason in the world why you shouldn’t get into property. (How many of you have had that experience eh)?
To make matters worse when beginning investors start out they may go to a conference or event of some kind and get heaps of great information then come home and get advice from their family and friends who are of course experts in the field…..well offer you so much advice about why you shouldn’t get into investing you’d think they were.
So how do we get started then? The majority of people don’t take this path till later in life when they have built enough equity in their family home. So what happens if I don’t have a home with heaps of equity you ask and you just want to get started now? Well of course this will depend on your current financial position but to get started you of course have to make a deposit for your property and it doesn’t really matter what stage of our lives we are at, we could all use some extra cash and one of the ways my wife and I did that was to investigate some of the many hundreds of ways to make money that a guy called Jamie Macintyre speaks about. In fact after we ordered his free $99 DVD (click here for a copy) – (oh and ask them for the free e-book too) – and later attended a conference, we actually bought this internet business.
There are many, many different ways to make money once you start educating yourself about how to do it. So wether you make money from your job, supplement your income and speed up the process using some of the different strategies mentioned in the free DVD or e-book or you already have a heap of equity in your current home to start out, you are going to need a deposit. Before the global financial crisis money was very easy to get hold of but things may have been tightened up a little bit since then but don’t despair, you just need to keep looking until you find the right lender.
So let’s say you want to go out and buy your first investment property for about $300,000 so you will need between 10-20% deposit – 30k to 60k. The next question I get asked is “what about all that debt and how can you afford it”? Well to start with its good debt or an asset….not a liability. In other words you are buying something that you know will go up in value over time provided you buy wisely and do your research and of course educate yourself about property investing. Don’t just go and buy the first thing you see or buy it because its close you where you live and you can drive past and admire it every day. Also don’t think that you will be a millionaire overnight because you will need to be committed to buying and holding your properties for as long as you can. You must buy in the right location, with the right amount of land content and at the right time of the building cycle (more about this later).
The main thing to remember is that you will not be paying your investment loan off completely out of your own pocket. You have three sources of income when buying investment properties in Australia (and other countries) and they are;
- Tax deductions
We will start to break these down into more detail in future posts but remember before you start, it’s important that you seek proper financial advice from those who specialise in this area as everyone will have different circumstances. I am not a financial advisor and certainly don’t profess to know everything about property investing but I would love to share my knowledge, my experiences, my mistakes and journey with anyone who wants to learn and take or continue this journey for themselves……to be continued.
All the very best Anthony Shaw