So, you’ve decided to become the next real estate tycoon. In your future lies in luxurious apartments and free flowing cash but how on earth do you actually get yourself there?
First, be prepared. Not everyone is able to make passive income from real estate but if you are ready to accept the challenge, invest a lot of hard work and consult the experts then you have a fantastic opportunity to build a solid, profitable property portfolio. It does take time and it’s rare for investors start raking in the big money after their first investment property purchase. Similarly, building your property portfolio beyond the first purchase does require patience as equity doesn’t appear overnight.
If purchasing your first investment property was a big hassle you might consider giving up – but you shouldn’t. Once you get past the trauma of property one, there are a multitude of opportunities. By this stage you will have learned some of the most common mistakes of property investing. Here are a few to look out for:
- It might seem obvious but make the right choice the first time. Rushing into a ‘sure thing’ generally doesn’t work out. Plan ahead and do a significant amount of research on things like location, local infrastructure, expected returns and rental yield growth. Do forecasters expect this area to boom or plateau? What are the tenancy rates like? By starting out on the right foot you will give yourself a head start as well as boost your investor confidence. The quicker you can build equity in your first property, the quicker you can look to build your portfolio.
- Don’t get too ahead of yourself. Be realistic. This is super important when it comes to understanding your own financial situation. Can you handle the repayments and management of the property and is the rent going to cover the whole mortgage or are you still going to be stumping up cash from your own pocket? Start small but smart; pick a property that is in an area that is booming or about to boom and go for one that doesn’t need a lot of upkeep and maintenance (unless you want a DIY project)
- Learn, learn and then learn some more. The only way you’re going to become a success in the real estate business is by constantly educating yourself. Once you have a handle of what goes into buying, managing and selling a successful property then soon enough you will be generating significant income from your budding property portfolio. Be patient with yourself and the market, it takes time but is well worth the wait.