Property – feels like everybody is doing it!

We all know, one way or another, that property is a fairly popular asset, and even if you’re not in the industry I’m sure, like me, you’ve heard BBQ stories of properties increasing in value or a friend has bought a renovator and managed to flip it for some profit. All sounds fairly sexy, but let me note; not all property is a good investment!!

Ok Alex, not helping me here, where do I start??

Step number one is absolutely – Educate yourself. Yes, before you do anything else. Educate yourself.

When I talk about education, I’m not talking about opening the financial review or I am talking about educating yourself on the numbers, understanding what drives capital growth, market cycles and learning from somebody who has not only done it but has done it extremely well and repeatedly so.

My favourite question is cheeky but true, “would you take weight loss advice from an overweight person?” Of course you wouldn’t! So why should we take property advice from somebody who hasn’t done it themselves or shown a proven strategy?
There are a lot of books out there and the internet is a weird and wonderful place, but a book that has not only been applicable for the last 20 years but has been endorsed by three of Australia’s billionaires is 7 Steps To Wealth. It is the number 1 book on investing in Australian residential real estate and part of the proceeds go towards educating troubled boys aged 9 -15 (yes, really).

Read it. Scribble on it. Tag it. Come back to it. Ask questions!

Step number two – Find out what your borrowing capacity is.

Once you’re somewhat educated, finding out your borrowing capacity can steer you in the right direction to begin. My good friend Emily is busting to buy her first investment property and she couldn’t decide between VIC, QLD or SA. We discovered she could borrow up to $410,000. Whilst she could afford both QLD and SA, she wanted the biggest block of land she could get her hands on and to be nearly cash flow neutral – so the answer was SA.

Also, I’d like to be clear – I am not talking about going to the one bank that you have all your savings and salary accounts with. Go to a broker who has access to many lenders – because, believe it or not, they will all assess your situation very differently! When I bought my second property, one lender was only prepared to lend me $250,000 (clearly not enough to buy property) and another was prepared to lend me $620,000 based on the exact same figures! A lot of people don’t realise it; there are a lot of options out there and going with the lowest interest rate and your own bank can often limit and delay you from buying property #1 (your own home or investment property alike).

So what are you waiting for? Get to it!

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