Many investors start out with the best of intentions and great enthusiasm but don’t manage to get past the stage of adding just one or two investment properties to their portfolio.
The sad thing is that, unless these properties are incredibly valuable with huge resale potential or provide out-of-this-world rental returns, the investor hasn’t done enough to set themselves up for retirement.
So, where did they go wrong?
In most cases, the root of the problem lies in their strategy – or rather the lack of one.
It never fails to amaze me how many people go into property investing without any sort of strategy, let alone one that is specifically crafted to match their personal criteria, goals, time frame, budget and risk profile.
It’s like starting a new business without a business plan – and without any idea of what you want to sell, or how.
You’ll never know what properties you should be buying and why, and worse yet, you won’t even know if they are improving your financial position!
Ultimately, your investment strategy needs to fit with your long-term goals. This is the first thing you need to identify.
If your goal is financial security in retirement, you need to know how much you want your property portfolio to generate and how many properties you need to achieve this figure.
You also need to understand your current financial position and what you can afford.
Understanding your budget is crucial when it comes to investing – or else you’ll be placing an overwhelming burden on yourself that can cripple you financially.
But your investment decisions can’t be based on affordability alone, as choosing the wrong ‘cheap’ property can similarly negatively affect your wealth creation.
Property investing is a business decision. You wouldn’t take starting a business lightly so why would you start investing without a clear and structured plan?
You also can’t be ruled by your emotions. Don’t get over-excited about a property and jump in without doing your due diligence first – know the numbers and the potential, and base your decision on these factors alone.
Have a clear understanding of your appetite towards risk and develop an accurate risk profile to guide you in your decision-making.
Every property that doesn’t fit your overall strategy will be the wrong choice.
Sometimes it’s helpful to get some expert guidance when developing your strategy to ensure you consider all the important factors relevant to your current position and long-term wealth creation and lifestyle goals.
A certified property investment adviser can help you define the best strategy to achieve your long-term goals.
If your financial capacity only allows you to hold a limited number of properties, you need to ensure you own the best-performing investments.
Being realistic with your goals and a developing a strategic ‘business’ plan around them will ensure you are able to provide for your future.
If this resonates with you, book in for a complimentary strategy consultation with Paul from We Find Houses.
He can help you define your goals and strategy, with steps along the way to achieve your long-term plans.
Call 1800 600 890 or email admin@wefindhouses.com.au today.
Paul Wilson is an Independent Property Investing Expert and the founder of We Find Houses, Educating Property Investors & We Find Finance. Paul has been educating and coaching investors since 2001. Paul provides valuable, independent guidance and support by teaching strategies on how you can invest successfully while protecting yourself from commission hungry sales agents and property spruikers. Protect yourself with knowledge, contact Paul today for a complimentary consultation on 1800 600 890 or email paul@wefindhouses.com.au
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.- This article originally appeared on www.wefindhouses.com.au.
