Four essential elements of investment preparation

There’s no doubt we live in exciting times – especially in the property investment sector. But regardless the market’s performance, I see investors losing out on wealth and opportunities time and again. These downfalls often seem to be the sum of multiple small errors coming together at once but are, in fact, the result of one primary slip up.
A failure to plan.

In our world, making fast decisions smartly requires incredibly preparation. Just look at the Tokyo Olympic Games. Of course, Ariarne Titmus didn’t just leap into the pool and take home a 200-metre individual gold. No, that 1 minute and 53.50 seconds of glory was the payoff for years of dedication. Fortunately winning at the property stakes won’t require you to dive into cold water at 5:30am every day. But success still requires the right preparation, and it’s never been more important.

Why preparation is more important than ever
As at the time of writing, the numbers for Australia’s property markets are astounding. According to CoreLogic, the Combined 5 Capitals 12-month increase in home values to 29th August 2021 is a remarkable 17.1 per cent. Pick the right market a year ago and you’d be sitting even prettier with Sydney experiencing 20.7 per cent growth, and Brisbane having an 18.1 per cent upside.

The reason we’ve seen values ramp up so significantly comes down to the traditional drivers of supply and demand. The number of buyers looking for a home or investment has increased, while the supply of available for sales dwindled throughout 2020 and 2021. There are myriad reasons for this, such as low-interest rates and government assistance, but the one big effect is buyers must now be quick to act when an opportunity presents itself. At the moment, decisions about whether to buy property need to be made in about 12-24 hours. Flinch, and you could miss out.

Here are my four essential preparation elements for successful investing so you can move quickly and with confidence.

1 – Get your strategy sorted
For anyone wishing to retire in the best possible financial position, there is no shortcut – if you fail to plan, you are planning to fail. You must lay it all out with the assistance of a qualified,  independent advisor. We need to understand your goals and aspirations. When do you want to retire and what income do you hope to retire on? We also need to understand the resources at your disposal. What income can your household comfortably contribute toward buying and holding an investment? And we need to, as best as possible, understand your potential life’s journey. Are you young with plenty of time on your side? Are you a couple thinking about having kids? Will there be the likelihood of a pay increase in the near future? All these variables paint a picture that helps plot a strategy for your investment success.

2. Understand structures
It’s incredible the number of investors who sign a contract but have given no thought as to the vehicle in which they’ll purchase the property. Again, professional advice is key here. Ask your advisor and check with your accountant on what structure best suits your investment plan. For some it could be a discretionary trust or company. For other, buying in their personal name might work – or in the name of their spouse. Even the opportunity to invest via superannuation could be the right idea. There are all sorts of tax implications which come into play depending on ‘who’ owns the asset. Make sure you know which will work best for you both now and in the long term.

3. Finance is key
Being finance ready in today’s market is essential. If you plough headlong into a purchase without being relatively certain funds will be made available for settlement, then you might get very badly stung. Work with a mortgage broker early so you fully understand how much you can invest and, even more importantly, how much debt you can comfortably service. This very important step can’t be left to the last minute i.e., three days before your finance clause falls due. If you make sure you are “application-ready” with all the required info and documentation, you’ll be a step ahead of the competition when the right listing comes along.

4. Work with a professional property investment advisor
Smart advisors spend months, sometimes years, becoming experts in specific markets. They study the demographics and market data. They know the sales evidence and comparable rents. They are across economic boosters such as future infrastructure and ongoing gentrification. All this work takes time, but delivers handsome dividends, because when the right opportunity presents itself, they can act swiftly and confidently. They know when a deal looks good and fits the criteria for capital growth and strong rental demand. Here’s another reason why an advisor is an essential ally. Time and again we hear about off-market deals as the “holy grail” of exceptional investment. But, in the truth, property advisors and buyers’ agents are offered off-market deals every day – and most of them are appalling investments! The true value of a talented advisor is in sorting through the options, so you don’t get stung. Saying ‘no!’ to the wrong deals delivers you some extraordinary savings in time, money and stress.

There’s no shortcut to quick success in property investment. You must be fully prepared before you act. It’s the best way of keeping risks low, upside high and your life worry-free.

Always review any property location research and investment analysis data, with a professional, QPIA (PIPA Member) qualified & accredited ASPIRE Property Advisor Network Advisor. Never rely on glossy sales brochures or property marketing information, ensuring a property is right for your strategy. Property Investing is about BUYING a property that matches your goals and aligns with your investment strategy, never be SOLD an investment, know your numbers!

Visit www.aspirenetwork.com.au or call our office to be connected with an accredited and independent Property Investment Advisor on 1300 710 933.

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