5 Golden Rules for property investment success.

5 Golden Rules for property investment success.

Property

1. A smart investor thinks strategically

Fail to plan and you plan to fail.

Savvy investors take this mantra seriously.

They start by working with an independent property strategist to build a strategic property plan.

In other words, they plan to become the person they plan to become by bringing their future into the present and doing something about it.

This is because they recognise that property investment is a process and things need to be done in the right order.

2. A smart investor manages their risks

A smart investor knows that a sound finance strategy is just as important as a sound property strategy.

This includes making sure they don’t over-leverage as well as building in sufficient financial buffers in their lines of credit or offset accounts to see them through the ups and downs of property investing.

They build in a cushion to cover negative gearing costs as well as the flat stages of the property cycle.

They also have an exit strategy in place for poor-performing investments.

3. A smart investor invests against the grain

A smart investor understands that the property market moves in cycles and appreciates the power of counter-cyclical investing, so they don’t necessarily follow the crowd.

They don’t pay attention to the marketing hype of overnight get-rich-quick property schemes or get caught up in the next hot spot to buy – even if everyone else seems to be flocking in that direction.

Instead, the smart investor is content sticking to their tried and true strategy knowing that the crowd is usually late to the party.

4. A smart investor reviews their portfolio regularly

Smart investors never rest on their laurels.

They regularly review their portfolio and analyze their performance.

They know there’s more to successful property investing than a good property purchase and the ability to hold on for dear life; in reality, it’s fluid and needs updating regularly.

Each property in a savvy investor’s portfolio undergoes review on an annual basis to determine:

• How the property has performed over the past few years in terms of capital growth and is it performing as expected.
• Whether this property is likely to outperform the averages over the next decade.
• If there is anything they could or should do to improve this property and get a better return on investment.
• What is happening in the local market of that property including any changes in the demographics of the suburb.
• Whether it is worth riding out the slump or selling and investing elsewhere.

5. A smart investor surrounds themselves with a team

They know that they are only as good as their team; in fact, if they’re the smartest person in their team they’re in trouble.

They realize they don’t have all the answers and instead surround themselves with successful, proven property investors.

They don’t try to wear all the hats in their investing business and employ a team of independent professionals to help them including a property strategist, finance broker, and accountant at the very least.