We've collated eight tips from real estate investors for those looking to create wealth through property.
Are you thinking about taking the leap into real estate investing? If so, here's a disclaimer: no one shoe fits all.
Though, it often helps to listen to the advice and experiences of people who've been through it all to support you in making logically informed decisions.
In this article we’ll be sharing some of the biggest tips we’ve collated from real estate investors. While there are probably endless tips, we'll be sharing the top eight. Some of these tips come from investors we’ve worked with and from our team of real estate investing professionals.
If you’re seeking financial advice or support in making that leap into the property investment space, we highly recommend that you consult our team of professionals. Our finance specialists and property investment specialists at REIF are here to point you in the right direction and take a holistic approach to your situation.
Tip 1: Tackle maintenance issues early on
When you plan on renting our your investment property, it's essential that you identify and immediately rectify maintenance issues before it gets tenanted. Let's be realistic, the last thing you want is to be chased up every second day from your tenant and property management company about issues that need fixing. The expenses can also be quite hefty.
At REIF we highly recommend investing in new homes for this particular reason. New homes (as opposed to established), generally, incur less maintenance issues and they come with a sufficient builders warranty period.
Tip 2: Avoid cross collateralising your properties
A few months ago we published a blog explaining the complications of cross-collateralising your property investments. We discussed the issues it can cause for investors from limiting your flexibility as a real estate investor, and the massive break costs that you can incur, through to the exposure to risk that it can put you in.
Essentially, cross collateralising your portfolio is when you use more than one asset to secure several loans. To learn more about cross collateralisation and how you can avoid it, we recommend checking out our blog here.
Tip 3: Diversify your portfolio
You’ve probably heard that all familiar phrase before, “don’t put all your eggs in one basket.” This is especially true if you plan to build an investment property portfolio. When growing your portfolio, you should have a range of different properties in different locations, different price points, and different styles.
You’re probably thinking why do I need to diversify?
Diversifying your real estate portfolio protects you from the volatility of certain markets.
Tip 4: Have an emergency fund
At REIF we call an emergency fund a war chest. This is an allocation of money that can protect you in times of financial distress. As we preach to our client’s time-and-time again, you should have an allocation of funds that can support you for up to six months in the instance that money is tight.
As an investor, this can help you fund your day-to-day bills and the costs of your investment property(ies). To see how you can create a war chest, check out one of our earlier blogs, here.
Tip 5: Hire a good accountant
If you don’t have an accountant, make sure to get yourself one! Especially one that’s well versed in the property investment space. They'll help you to take advantage of your tax incentives from your property and make sure you get the most return for your buck.
A good accountant will help you to identify the types of tax concessions that you can claim from your property investment(s). Such concessions include depreciation, property management fees, maintenance costs, plus so much more!
Tip 6: Think with your head
Try to eliminate any sort of emotional attachment you may have to your investment property(ies). An investment property should be considered as a business transaction. Worrying about the colours, design and overall aesthetics of an investment property isn’t necessary as you will not be living in it.
You should, however, consider the practicality of it from an ROI perspective.
Tip 7: Take time to discover the right investment
Just like any financial decision, when you invest in real estate you should take the time to research the right opportunity. Consult professionals and look at markets that are expected to perform well over time. You should also make sure to research the vacancy rates within the area, amenities, demand, and infrastructure projects.
On top of that, as a real estate investor, you should look at the different type of real estate investing options that are out there to support you on your quest to creating wealth.
Tip 8: Seek advice from the experts
This tip is straightforward. If you want to get ahead of your financials and create wealth for your future, you must seek assistance from people who know what they are doing.
REIF have a team of professionals that can support you from the beginning to end journey of your investment journey. We’re always here to help and take an individualised approach with supporting you to achieve your goals.
To start a conversation or seek advice on your real estate investment journey, please feel free to contact REIF on the details below. Additionally, be sure to check out our eBook.
Ph: 1300 130 932
We explore this topic in our eBook 'Building Wealth Through Property.' Check it out here for FREE!
