Successful real estate investors operate on philosophies that help them grow their wealth by building a portfolio of properties.
Many limit their risk by diversifying investments in different cities and suburbs, and they will hold a variety of property types, such as apartments and detached houses.
When they set out to build their portfolio, the most successful underpin all their decisions with a personal wealth goal, game plan and timeframe.
Having a strategy is critical in the property investment game. You must conduct your own research on various property types and the areas you have targeted for investment.
At the same time, top investors will always seek advice from professionals, such as a builder, a real estate agent, solicitor and mortgage broker.
Armed with their knowledge, they are better able to resist the emotional purchase. This avoids one of the most common mistakes – paying too much.
Time usually heals all such errors because the value of a property has shown to rise in the medium to long-term, but a mistake can be very painful at the time and cause a lot of worry.
Another trip-wire to stop this mistake is to have your budget firmly in place, established with a mortgage broker who can help you assess what you can afford and who has also put the finance in place in advance of any purchase.
Even with finance in place, a smart investor is not easily seduced. They will never invest in the fashionable suburb of the moment. It might be tempting but ultimately they know it is a mistake for long-term wealth creation.
Your research should provide insight into the next high-demand areas. This will maximise your returns. Solid signposts for these areas include planned government infrastructure projects, gentrification trends and residential spillage from surrounding suburbs.
Even with all this knowledge and confidence, smart investors still mitigate their risk.
If a purchase is reliant on an income, then they will take out wage protection insurance. Where a property is to be rented, insurance for rental property damage is essential.
Lastly, successful investors will reassess their portfolio periodically to separate the successful purchase from the duds. Sometimes, you have to cut those under-performers loose to free up cash for a better opportunity.
Top Tips:
- Think Long-Term for financial goals in mind
- Use your head, not your heart. Don’t let emotion conquer all
- Know the value, don’t pay over the odds
- Research areas that are on the up
- Know your budget, have the finance ready to go
- Ask the experts. They know the value of experience but they do their research, too
- Understand risk and know how to mitigate it
- Don’t set and forget. Property portfolios need to be reassessed periodically, just like exposure to financial markets
- Take steps that are well researched and calculated. This limits the fear factor