For many, the great Australian dream is to own their own home.
This was also our parents dream, yet today that dream can be realised much sooner than our parents ever did, providing you’re prepared to grasp the opportunities available to achieve it.
I am noticing a generational trend where younger buyers are becoming investors before they become owner-occupiers, which I actually applaud. In other cases, mostly in the 35 – 50 age group, there is a more defined and traditional transition that takes place from homeowner to investor.
Unfortunately though, while many do achieve the homeowner dream sooner than their parents, most actually don’t retire any better off - they forget to reset their goals and fail to leverage / tap into their true financial potential.
While real estate is considered a safe way to grow your wealth, save for retirement and generate another income stream, the transition from homeowner to investor is a big step.
This step is made a lot easier when the concept of good debt and bad debt is better understood.
For some, there is security in paying off their mortgage and becoming debt free, because the thought of any debt is scary!
But this is precisely where a change of mindset is needed, as there is a missed opportunity to leverage and utilise good debt to fast track your wealth creation plan.
While there are many aspects that influence your ability to get started and what type of strategy you should start with, lets look at a few important ones.
Understanding Your Finances.
If you’re not market ready, experience tells me that regardless of your best intentions to become an investor, you just won’t get started.
If you don’t understand how much equity you have, what your borrowing capacity is, or what financial result you want to achieve, then how will you know what you’re aiming for? And how will you be able to secure an opportunity ahead of the competition if one presents itself?
You also need to understand the difference between good and bad debt, and what impact each of these have on your everyday household cash flow.
You may be surprised when you discover just how beneficial some good debt can be.
Set clear goals
Affordability is not an investment strategy and neither is an unqualified opinion from someone recommending a certain investment.
Every property you purchase has to have a purpose, i.e. what contribution will this property make towards reaching your financial goals? You need to be clear what this is before you commit.
You will also need to set tangible targets such as return on investment, cash flow and most importantly, plan your exit strategy.
Ensure that you balance the level of risk you are willing to take when developing your strategy.
It’s important to think about investing on a business level, not an emotional level as emotions can often override sound investing principles.
You need to do your research, get a grasp of the market and fully understand your situation before diving in.
Get some help
Taking action and getting started can sometimes be tougher than it seems when juggling all the daily activities that compete for your attention.
For some, you might have already started but have lost your momentum. Aligning with a property investing expert, who can keep you focused and on track, will protect you from falling victim to procrastination.
If you feel like you’re falling behind, lack time, knowledge, or confidence, and you know you could achieve so much more with someone on your side, you should enlist the help of a property expert.
A property expert is able to help you gain clarity around your financial capacity, your appetite for risk and which strategies are compatible in helping you reach your desired outcome.
After helping you become market ready, a property expert can also help with your understanding of different market conditions and find suitable properties that are matched to your strategy.
If you are able to secure the right properties, that provide you with additional income and capital growth, you will be well on your way to building a solid investment portfolio.
If you want some help making the transition from homeowner to investor, visit www.wefindhouses.com.au and book a complimentary consultation.