Buying A Second Property? How Can I Move Past My First Property Sooner?

Buying A Second Property? How Can I Move Past My First Property Sooner?

Still stuck on your first property?

So are 72.8% of Australians according to the latest research by RP Data!

When I first read the statistics I was dumb founded for a few simple reasons:

  • Property has generated a consistent return of 9% per annum to investors over the last 20 years, to the 31st of December 2011. Read more about this here.
  • 10 off Australia’s 50 wealthiest business leaders made their money through property investing.
  • There are countless stories of successful property investors in Australia making great money right now.
  • Information is relatively easy to access and simple to apply.

Rather than get stuck trying to understand why 72.8% of Australians only own one property I thought I’d share the findings of a great article I recently found on Your Investment Property which looks at how to get past your first property and buying a second property.

1. If you’re just getting started, make sure you start well!

Many first time investors rush into the market, buy the wrong type of property and do not consider their purchase is going to affect their next one.

Remember each property you purchase is either setting you up for the future or holding you back.

You really need your first property to perform within 24 months so you can access your equity and get back into the market. This is where research and timing, along with buying for value and potential, as opposed to buying cheap, become vital.

2. Understand your financial situation and your goals and buy accordingly

Remember when your mum used to say, spend within your means.

Just because you can borrow $600,000 doesn’t mean you should buy a $600,000 property straight off the bat.

Identify what you can borrow and plan your next steps.

A great way to start is to sit down with a bank manager, mortgage broker, accountant or solicitor that you trust and share your long-term goals. Ask them exactly what you need to be earning and investing in to reach your goals.

A great way to start is to think about where you want to be in 5 years then work backwards. If you get to the beginning and realise you need to be earning and investing more then you need to make the changes or set a more realistic plan.

There is a simple science to buying more than one property:

Buy well + Add value + Increase your cash flow + Re-invest your profits

3. Learn and apply

In this article by Your Investment Property, Helen Collier- Kogtevs the director at Real Wealth says “you need to learn everything you can about every aspect of the industry”.

I completely disagree with this comment and feel over whelmed by even thinking about knowing everything about this industry.

I believe you need to understand a few fundamentals, find a strategy that work for you then repeat it till you achieve your goals.

For example you could buy positively geared properties, buy under valued properties and renovate, buy close to the CBD, build dual occupancy properties or do a combination of all of these. The key is to find something that works for you then become a specialist in that particular property investment strategy.

4. Find a way to make money through property investing then go and make it.

Property investing is great fun, but it’s ultimately about creating a better life and lifestyle for yourself and the people you love.

Your Investment Property is spot on when they say you need to start by learning how to buy and sell profitably.

“Making profit from real estate is not just about buying or selling. Building a portfolio requires planning your fourth and fifth purchase while still on your first.” While this may seem overwhelming its this type of long term view that will set you up for success.

If you can remove the emotion from your purchases, which is extremely difficult on your first few deals, and begin to look at property investing as a business you will be surprised what you will achieve.

The article goes on to discuss planning, deciding on a strategy and a couple of other valuable points which you can read here.

The great thing about the property industry is its filled with stories of people over coming adversity to live their dreams.

Remember there is a science to buying your second property and its simple:

Buy well + Add value + Increase your cash flow + Re-invest your profits

 

Ben Everingham

About

Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.