I recently came across this article on Realestate.com and thought it was extremely relevant to me and the majority of my friends and family.
I like the majority of people around me am very short sighted in the sense that I have an extremely clear plan for today, this week and 2014, but a much fuzzier version when looking any further than that.
This article has inspired me to write a 5 year property investment plan which I will share with you all in the coming weeks.
Id love to hear what your plan for the next 5 years look like in the comments section below.
Finding your property dreams keep hovering out of reach? It could be that you need a dose of longer term thinking.
Everything about our world is ‘now’. Knowledge at our fingertips. Entertainment at the touch of button whenever we feel like it. Overnight successes. Instant meals. Some would argue we’ve lost the fine art of waiting.
And it’s tempting to apply the same thinking (or lack of it), to our financial and property lives. We beat ourselves up because we’re not saving fast enough, or feel like throwing in the towel after a year of searching for our dream home with no luck.
But finance experts say it’s futile to get frustrated without a longer term plan. A five-year action plan seems about the magic number, according to Executive Director of Smartline Personal Mortgage Advisers, Joe Sirianni, who says that time frame has the greatest chance of success for people looking to improve their financial outlook and build wealth through property.
Why five years?
“Five-year goals require an ongoing commitment to ensure they are achieved, but the end result doesn’t feel like it’s going to take forever to achieve – the finish line is not that far away,” he said.
Success isn’t squeezing yourself into someone else’s template, but identifying what matters most to you, then making a plan of attack
Here are a few five-year goals he shares that Smartline clients have achieved:
1. A young couple expecting their first child wanted to buy a house with a backyard near their family, but couldn’t afford it. Their five-year plan was to buy two small investment units and do their best to reduce the debt over the five years At that stage they could either sell the units and buy a house or use the equity in the investments to buy the house. They ended up keeping the units and used the equity to buy a spacious home for the family.
2. A couple with three young kids lived in a 2.5 bedroom house. They wanted to upgrade to a 4 bedroom house but couldn’t manage the renovation costs. So they purchased a $300,000 investment property (the rent almost covered the full mortgage repayment) and started paying down debt with every spare cent. Five years on they began their renovations, having sold their investment property for a capital gain.
3. A man in his mid 50s needed to boost his retirement savings – his goal was to own two investment properties that would pay him $1000 per week to live on when he retired at 60. To do this he purchased five smallish investment properties. Six years on and he sold three of these properties and used the proceeds to almost clear the debt on the remaining two investments. At 60 he makes $800 per week (after the small mortgage repayment).
4. Another couple wanted to live in a suburb well out of their price range. Their five-year plan was to buy a fixer upper for close to land value, pay down the debt and then rebuild a nice new house on the block. They have successfully significantly reduced their mortgage and have just had their construction loan approved. They’re on track to move into their new house at the 5.5 year mark.
What’s your plan?
The above are all investment-centric plans, but it’s important to realise there’s no ‘right’ dream. The white picket fence, the gourmet kitchen. The block of units, or the new business. The granny flat or the rural retreat. The return to university in retirement.
The key to success isn’t squeezing yourself into someone else’s template, but identifying what matters most to you, then making an achievable plan of attack to get there and remembering it won’t happen overnight.
Let me know where you’ll be in 2019 in the comments below?