Buying that first property feels like an amazing achievement, and each time you add to your portfolio, you know you’re a step closer to achieving your dreams.
But starting is only the first step. Over the years, you’ll need to grow and maintain your property portfolio in order to see your wealth accumulate.
Unfortunately, there are still many pitfalls along the way that could trip up even the most learned investor.
Here are our top tips to help you avoid those pitfalls and achieve your dreams sooner:
Tip 1: Define your ultimate goals
When you got into property investing, you might not have had a specific plan in mind. You know that property is a great way to build wealth, and perhaps the perfect opportunity came up and you jumped.
Now that you’re in the game, it’s important to think about your goals with property investing. You’ll need to continue to make vital decisions about your portfolio in the months and years ahead, and having a set of goals in mind when you make those decisions will help you to keep yourself on track.
- When planning your goals, think about:
- What do you want out of life? What aspirations could an increase in wealth help fund?
- What legacy/inheritance do you want to leave for your children?
- What makes you feel secure? Is your goal to be mortgage free, or do you want to grow as much wealth as possible?
- What changes do you want to make in your life? eg. a move overseas, a nomadic life or travel, or marriage and children in your future.
Tip 2: Weigh each decision against your goals’
Should you sell? Should you buy? What types of property should you buy? Commercial or residential? What will you do with an untenanted house? How should you diversify?
There are so many questions and decisions to be made about a property portfolio. We can help you figure out which options align with your goals. For example, if your goal is to pay off your own mortgage faster, then selling off a property in the current market might be a great idea. Whereas if you’re trying to secure wealth for the future, then holding out for long-term gains could be the better option for you.
Tip 3: Don’t follow the crowd
According to a recent CoreLogic study, over 60% of Australian investors are losing money on their properties. How can this be with a booming market?
Investors are jumping in without a plan and without any advice apart from “do what everyone else is doing.” They’re playing into media hype and letting the news or well-meaning friends and fellow losing investors guide their decisions.
But you can be different. By focusing on maximising the potential of your portfolio, and making decisions in line with your strategy and goals, you’ll be able to overtake the herd.
Tip 4: Accountants are awesome
A good accountant is the investor’s best friend.
When you start playing with a lot of new wealth, it can be easy to fall into old habits of trying to keep as much of it as close to you as possible. Many successful property investors are the “do-it-yourself” types, who want to control every aspect of the process, including doing their own taxes.
While it’s true that you could do your own taxes for your property portfolio, especially if you’re using an awesome cloud accounting product like Xero, that doesn’t mean that you should.
You could lose all the wealth you gain in fines and fees if you get your taxes wrong. A good accountant will help you to maximise a number of deductions you can take and set up your business structure in the most tax-efficient way. You’ll likely save more in an effective tax strategy than you will spend on your accountant’s fee.
Tip 5: Listen to the experts
These days, everyone and their aunt is a property investor, with their own predictions and get-rich-quick schemes for the future of property.
When you receive advice, always consider who that advice is coming from. Are they qualified to give that advice? Are they successful at what they do? If not, don’t give their advice any weight.
By partnering with us, you ensure you’re always one step away from all the qualified, professional advice you need.
Have you chatted to OPES recently? Is it time to define your goals and reassess your current holdings? Give us a call today. We’d love to reconnect.