After 13 years of investing in property, I recall the nervous anticipation of walking into my bank manager’s office for the first time alone. I was quietly confident, but also terrified .
My confidence came from knowing that I have completed my due diligence accurately. In a professionally presented folder I enclosed detailed budgets supported with current demographic statistics to support my forecasts.
I was terrified that the bank manager would approve my loan, and I was terrified he might laugh in my face. Ugh! Your imagination can paint some crazy situations in the cinema of your mind!
What prevents you from investing in real estate?
This is a question I ask of people who are hesitant to take the plunge into real estate investing.
Mine was the fear of the unknown, along with the financial pressure it would place on my family if I got it wrong.
Are you scared of making a mistake? Does going into debt make you anxious? Is the idea of a 30 year commitment overwhelming? Do you feel real estate is too expensive?
I will bullet point four areas that you do need to consider when buying a investment property. Here they are:
1. Vacancy Rates
No money = no rent
The property price and location need to be in demand.
Avoid short term cycles found in mining, regional areas and holiday homes
Good property management to maintain the property presentation
Ensure that you have insurance in case of property damage and loss of rent
Ensure you have a financial buffer or offset account (Line of Credit)
Adequate personal and professional insurance for the unexpected
Research your interest rates (lock in the % of your loan for certainty)
Plan ahead for repairs and mainenance
5-7 years time a house will need to be painted
10 years time require re-carpeting
10 – 15 years time a new hot water unit
4. Long Term Strategy works best
Real Estate is a longer term strategy of 7 years +
Don’t get scared of the high/low term movements
Go for the fundamentals
Like any investment, there will never be any guarantees. With careful due diligence, research and financial budgets it needn’t be a dream, but your new reality!
What is holding you back?