7The Seven Crucial Steps to Being Investment Ready
The Seven Crucial Steps to Being Investment Ready Being investment ready is not just about getting a loan and having a few free Saturdays to view open homes. There are a number of components you need to factor into the process if you want to succeed long-term and I am talking true success, not just luck. In the pre-planning you don t want to push through too fast. Your investment strategies, goals and even exit plans can make an enormous difference to your long-term financial outcome. Lets be frank here, we are this game to make some money right? I am talking true step-up financial wins. There is no shame in seeking out wealth as the end game. The additional revenue made from having a robust property portfolio can go toward helping family, the community, provide greater travel options, healthier food choices and provide the best health care should that need arise. On the flipside maybe you want the jet-skis and the kick-arse wardrobe. Whatever motivates you, use this as the catalyst for making a start now. Let s take it from the top. The 7 Crucial Steps to Being Investment Ready 2
Are You Investment Ready? Finance the Deal If you don t have your finance in place you can t buy a property. You can look online, you can go to open inspections, but you can t make an offer, seize a deal or negotiate a sale. You probably have no idea precisely how much you can even shop with at this point. First step in the investor journey is to meet with a good broker. Ask around for referrals from friends or family if you don t know where to start. A broker will look at the bigger picture and turn to an online aggregator that alerts them to the best loan that suits your income, taking into consideration your age, other assets, liabilities, any dependants and your credit rating. There is an increasing degree of paperwork required to get a loan approved these days. It can be laborious and you will need to be up to date with your tax returns plus have a deposit of at least 10% and residual savings to cover other outgoings such as stamp duty if you do not qualify for any concessions. Your broker will alert you to the documentation required, they will liaise with the bank on your behalf, when it comes time to purchase they will push for a fast valuation. Good brokers work really hard for thevir clients, we have worked with both versions, and the difference in service is vast. An independent broker can save you tens of thousands of dollars over the lifetime of a loan. I have worked with investors that have taken what they perceive as a short cut or an easy way out. They simply turned to the bank they had a savings account with and didn t challenge the loan process. Being a long-term customer of a bank does not guarantee you service or that you will be looked after any better on interest rates. Rule 101 - don t get the finance wrong! The 7 Crucial Steps to Being Investment Ready 3
Get Yourself Educated There are many options available now in the education space for property investing. If you want a cheap and quick baptism get out to some open home inspections in the location you want to buy in. Start exploring what is on offer, what you need to look for, the qualities and merits of a property. Learn to speak to agents. Visit properties in your budget to understand what is available look within a 10% range so you can compare. If your budget puts you into a different region or state then make some enquiries with a local property buyer s agent that can assist. This is money well spent. They will know the market, opportunities, facilitate the buying process, and ensure you don t overpay, they will understand your budget and strategy and deliver for you. What many buyers agents will also do is to also mentor you through the process so you learn through the eyes of an expert. We always recommend you jump into the search portals to see what is selling in the location you are looking to invest in also. Start to understand what things are selling and renting for, do your equations around the money you can borrow and your comfort in repaying that loan. What sort of rental return do you need to even cover your mortgage? Is that even achievable in the area you are looking at? The 7 Crucial Steps to Being Investment Ready 4
Nailing the Mindset Investing in property isn t simple. It is a journey, and depending on your personality it can be a journey of months, or years for some. I meet investors all the time who are ready to purchase but kill their own opportunities by over analysing numbers and risk. They arrive to a state of panic time and again by not actually taking action. Your strategy could be a buy and hold for now and a sub-division to be done in time, it could be to renovate, add value and use the equity to buy again. Whatever you feel will be your approach given your resources, knowledge and budget you need to use this as your perimeter for that property search. As for goal setting, these cannot be understated. Dedicate time to considering your 12-month plan, 3 years from now and even the exit strategy. Write goals down dot point them; write them as a letter to yourself, in a timeline, whatever resonates best with you. Exit strategies are also important and they can help you overcome indecision. What is the worst scenario that could happen in the event you had to sell? The market has dropped, you need to renovate to sell, or you no longer get the same rent. Can you overcome these scenarios? What is the absolute worst outcome? If you are serious about wanting to invest in property then you need to set yourself a strategy and a long-term goal. The 7 Crucial Steps to Being Investment Ready 5
Know Thy Self You know what you are like more than anyone else. Start to recognise what stresses keep you awake at night. There is no one size fits all investment formula. Consider your ability to rest with debt, stress, holding costs, risk etc. It is probably recommended you play it a little safer and not make your first purchase a sub-division and townhouse build. The 7 Crucial Steps to Being Investment Ready 6
Are you hugely indecisive or trigger happy, easily led by others or talked out of good decisions by well meaning third parties. Many new investors are driven by emotional based decisions, the process is exciting and new we get it. It can be hard to make such a big decision based on simply logic and numbers but that is an approach that needs to embraced or at least heavily considered. a big decision based on simply logic and numbers but that is an approach that needs to embraced or at least heavily considered. If you know that you are prone to over analyse or, jump into a deal too soon, then you need to look for a trusted wingman in the investment decision/buying process that can act as the voice of reason. This person could be a friend or a property professional that makes you see reason. Pick that person carefully and for the right reasons. Take advice off someone who is active in the property space or at has at least achieved success. Recognise Your Strengths and Weaknesses. The 7 Crucial Steps to Being Investment Ready 7
Relationships and Networking Building rapport with agents in the area you are searching in is the best strategy to achieving success. People like doing business with people they like. Essentially they represent the interests of the seller, not yours. Agents will also share with you off-market or upcoming deals. Build a relationship and you might get a stronger indication on what a property might realistically sell for. Active agents, those hungry for a sale, will remember names and faces of purchase ready buyers. They will know you have attended multiple opens and know what it is that you are looking for. It is not uncommon for agents to share new to market listings with us before they hit the web; they know we have serious buyers on our books. One of the best deals I ever secured for a client was via a text message that stated the house was so cluttered he didn t know how the professional photos would go. The vendor was delighted to make a sale without having to start the mega task of decluttering. We also gave her a long settlement window to allow extensive time to move out. The best way to gain leverage with agents is to get yourself known in the market by familiarising yourself with the teams at open homes. Introduce yourself; tell them what you are looking for. Keep some mystery around your total budget but let them know the approximate range you are looking within. Building rapport with agents is a simple networking trait that works. The same way it works in business. Think of your property portfolio like a business enterprise, not just a side hustle. Building rapport with agents is a simple networking trait that works. The same way it works in business. The 7 Crucial Steps to Being Investment Ready 8
The Right Team Getting the right team of professionals around you is imperative to your success. I am talking about the right broker who will nail your funding, chase the banks for valuations and move that deal forward. Your Solicitor, who will review a contract for you and provide sound advice. Conduct the necessary searches on the property and ensure you sail through to settlement with little stress on your behalf. Don t pay for a supermarket variety Accountant. You can claim a number of things against your property. Cost of managing the property being just one of a myriad of claims you can make, not to mention depreciable items. If you are confused already go and get yourself a good Accountant! A property Buyer s Agent, I have used one before and, full disclosure, I am one. Having a professional in the buying space on your team is GOLD. Some property advocates will only buy property if you commit to a full service. It is a fee for service; some charge a flat fee and others a % of the end figure spent. You can negotiate the service level with some Buyer s Agents. We started to offer an The 7 Crucial Steps to Being Investment Ready 9
The buyer s agent is always the centre of the deal bringing together the selling agent, vendor, solicitors and broker to bring home a contract sign-off for a client. analysis and negotiation fee only, for clients who loved the hunt for property but understood they would come undone in the negotiation stakes. There are so many deals we have put together that would not have proceeded otherwise. Whether it was because of tardy paperwork, client being in a conference, delays with contracts or vendor etc. The buyer s agent is always the centre of the deal bringing together the selling agent, vendor, solicitors and broker to bring home a contract sign-off for a client. More often than not, you will save their fees based on their negotiations with the agent. Winning! Your team doesn t necessarily end there. You could enlist the services of a Financial Planner as you step deeper into the path of investing and planning for your future. Some people have property mentors or belong to meet-up groups that provide support in the space of buying a property. Ask around for advice. Filter what you hear and learn to take from it what suits you and your understanding in the current market. Listen more to the experts and those people you know who are successful versus the multiple opinions that you hear thrown around at a barbeque. Most importantly, just start. Most really successful long-term investors I know with large portfolios have 2 regrets the houses they sold along the way and not starting the journey sooner. Happy Investing! The 7 Crucial Steps to Being Investment Ready 10
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