When considering property investment, there are preparations you need to make to ready yourself for the potentially life-changing decision.
The right approach to property investing can help you avoid running into financial turmoil. By laying the groundwork and drafting your investment game plan, you will be able to stay in control and on top of your affairs.
Here are five things to do before taking the property investment leap.
Tally your assets and expenses
Spend some time to tabulate all the assets you currently have. This includes any jewellery you might have, your car, your home (if your own one), and any other properties you have under your name. Also include any investments that can serve as alternative financial resources you can tap into when needed.
After that, check your ongoing and recurring expenses. Create a breakdown of bills you pay regularly, as well as any loan repayments you may be making (and for how long).
Having this information on-hand will help you determine how much more you can take on in your investment journey without running the risk of giving your finances too much strain from excessive debt.
Analyse your risk tolerance
Are you a high risk taker or a low one? You might even be somewhere in the middle. It is really up to you to find out. Knowing your risk tolerance will help you strategise on your investment in a way that suits your risk profile. A simple way to self-assess is to take a look at the following:
- Your age – the closer to the retirement age, the less you would want to take on risk. Otherwise, if you’re still young and making a modest income, you’ll have greater capacity to take on more risk.
- Your back up – in case you hit bumps along the way, do you have savings you can tap into in worst case scenarios?
- Other source/s of funds – apart from your day job and property portfolio, do you have other sources of income? And is it stable?
Get valuable advice from a mortgage broker and an accountant
For a beginner investor such as yourself, mortgage brokers are the people to go to. They have valuable property investing information which you will need in your investment journey. They can also give you assistance in calculating the right loan amount for you based on your personal as well as your current financial standing.
An accountant, particularly one who is property-focused, can likewise help you structure your investments in order for you to maximise your cash flow and tax deductions.
Read up on investment jargon
Dive into research about all things property investment. The Internet is your best resource for tapping into a wide range of data in the form of articles, books, and magazines. Before you invest, make sure you have adequately educated yourself on the ins and outs of property investing.
Add up the numbers
Don’t let numbers intimidate you because when you invest in property, you’re going to need to have a deep understanding of numbers – what they mean, how to get them, and where to best do it. It might not come naturally at first, but with enough research, experience, and determination, you should have a fair grasp of it in no time.
Prepare yourself to experience the benefits and the thrill of property investing so that when you do jump into it, you will have everything you need to make a successful journey that will yield positive results and solidify your stature as an investor.