While giving up smoking, taking up exercising or travelling more might seem like the more typical New Year’s resolutions, there’s no reason investing in real estate should be neglected when it comes for setting goals for the coming year.
But like a lot of promises people make to themselves as the fireworks are set off, grand plans of property ownership often come to nought as the year goes on.
“Having a New Year’s resolution to start investing is a great thing, but buying a property is a major step and like other resolutions people often lose the energy and motivation after a week or so,” Michael Beresford, director investment services with OpenCorp said.
“The absolute first thing people should do if they’re thinking about investing is sit down and come up with an action plan that sets out what they need to do to get to the point where they are ready to buy their first property,” Beresford said.
While an action plan may vary from individual to individual, Beresford said there are two vital points that should not be left off.
“One thing people starting out need to do is to understand their borrowing capacity, there’s no point in coming up with a strategy that results in you wasting your time looking at properties you can’t afford,” he said.
“Another thing people should do early on is to educate themselves. That can be done through reading books and that sort of thing or by finding a mentor, be it a friend or family who has had success in property or a professional.
“Whoever it is it needs to be someone who has an identifiable approach that has worked for them, rather than just somebody who is giving hearsay advice.”
While sitting down and coming up with an action plan is Beresford’s first piece of advice for those looking to start investing, he also said people need to realise that doesn’t mean they’ll instantly come to a point where they can make their first purchase.
“You need to identify an approach and make sure you go through it step-by-step and it might be something that you do over a year.
“One way to think about it might be setting yourself up so that you’re at the point where your 2017 resolution is to actually buy a property.”
Though an action plan and sound strategy may not instantly deliver first time investors a property, Beresford said they are likely to prevent the inexperienced from falling victim to some common mistakes.
“There a three common mistake that you see from first time investors. The first is buying on impulse when people just rush to buy a property. I mean you wouldn’t just go out and buy a car without seeing if it suits your needs and you need to make sure any property you buy fits your plan.
“Similarly a lot of first time investors buy on emotion. I was on holidays at the beach with a friend and on his first day back at work he was looking at holiday houses. You need to make sure that with any purchase you’re doing your due process and you’re not making a very expensive mistake.
“The other thing that first time investors need is a real understanding of how buying a property is going to affect their cash flow. You don’t want something that is going to make things really tight from week to week and make you lose sleep. You’ll just end up hating the whole thing.”
While the New Year might be a good time for those thinking about investing to get their cards in order, Beresford said the experienced investors should also think about reviewing their situation.
“The summer break is a great chance for people to take some time and look at where they are and how their portfolio is going.
“One of the good things about coming up with a really clear plan from the start and sticking to it is that you shouldn’t ever need to make any real major changes. There might be a couple of minor things here and there, but if you do the right things at the start that should be it.”
