There’s nothing quite like buying your first home is there?
I remember quite clearly when I became a property owner even though it was a long time ago now!
I was proud of what I had achieved, however, in hindsight, I was buying with emotion rather than strategy.
The thing is buying a home, rather than an investment, does involve more emotion.
And that’s because it is the place where you will potentially spend many years of life and create untold memories with your friends and family.
Today there is also much more information available at your fingertips to help you buy the very best property from the outset.
So, if you’re a newbie investor, what are some of the things that you must understand to start your journey on the right footing?
1. Education
Let me be clear: there is a lot of property investment information online these days.
But a lot of it is rubbish!
The trick, of course, is learning to decipher between what is good advice and what is bad.
Note: The first step to educating yourself is one that you’re already doing.
How do I know that?
Well, you are reading this blog so have likely identified our site as one that provides knowledgeable information about the property market as well as investment strategies.
Educating yourself by reading blogs, and books and attending professional seminars will help ensure that you understand what is involved in being a successful property investor from the start.
The last thing you want is to pay a very large learning fee at the end!
2. Research
Just like with education, research is vital if you’re starting out as a property investor.
The more you understand how market cycles work, as well as different investment strategies, the greater chance of success you will have.
Consider this question as an example: Do you think a rental guarantee is a good or a bad thing?
Some newbie investors believe that a developer offering them six weeks of rent “for free” is money for property jam.
But, of course, it’s not.
What is it?
It’s a marketing trick to get you to buy one of their brand-new units in an area that is most probably already over-supplied.
What they know that you don’t is that you may well struggle to get a tenant for the rent that they’ve helped you believe it will achieve.
However, if you’d researched the local area, you would have understood that the rental market for new units was flat and would have chosen to select an investment-grade property in another location instead.
3. Patience
Let’s face it: successful property investment takes time.
We all know that patience is a virtue but it’s even more so when it comes to investment properties.
You must learn patience, if you’re not already a patient person, to be able to ride the myriad ups and downs that inevitably happen during your long tenure as a landlord.
Too many newbie investors bolt at the first sign of trouble, such as when their property becomes vacant in a period of soft rental market conditions.
Rather than realising that this happens to most investors and dipping into their financial buffers, they get spooked and decide to sell.
This is rarely a good idea and will no doubt cost them in the long run as they’re missing out on the many years of compounding that is required to create wealth.
4. Delegation
Back in the “old days”, the only real estate agents that you met were the ones that were trying to sell you property.
These days, however, there are experts out there who represent buyers rather than sellers.
Buyers’ agents are a common part of the Australian real estate landscape today with more and more investors opting to engage a professional to ensure they buy the best properties.
Newbie investors, too, are seeing the value of delegating to professionals instead of asking their Uncle Larry for advice when the only property he’s ever bought was back in 1983 and which was around the corner from where he grew up.
Professional buyers’ agents purchase properties around the country every single day for their many clients.
And that means that they understand the market and property better than someone who might only buy one or two in their lifetime.
Practice makes nearly perfect after all, doesn’t it?
The lesson from all of this is that newbie investors don’t need to feel like they are running blind.
There is a plethora of quality information out there so they can educate themselves, plus property market research is the best it’s ever been.
The secret is to then have patience as they build their portfolio property by property, perhaps with professional guidance.
And they must be brave enough to accept that sometimes, although rare, the market may not be their friend.
But that will pass – it always does.
