Banjo Smyth

Ok, so you have decided that you want to buy an Investment property but you’re probably finding it hard to know where to begin.

Should I buy an old house?  Should I buy a new house?  Should I renovate? Should I buy a block of land and build a house? What does ‘off the plan’ mean?

All are great options but I’m going to focus our attention on what I believe is the best and most ‘accessible’ option that any ordinary person can use to fast track their Property Portfolio.

I like to call it the ‘5 R’s Strategy’
It revolves around buying an existing property at or under market value.  Then you simply follow the 5 R’s.

Revamp
The idea is to buy a property that is ‘structurally sound’ but in need of some cosmetic repairs.  I won’t go into too much detail here but you would be amazed at how much value you can add to your property by doing a few minor things.  Whether you polish the floorboards, paint the walls or even just replace some light fittings you can literally add thousands of dollars to the value of your property.  In Chapter 7 (Revamp/Renovations) we will discuss how much (or how little) you should do depending on your circumstances.

Rent
Simply rent your property out and start letting your tenants pay the mortgage.  Chapter 8 (Leasing out your property) will cover the pros and cons of doing this yourself or going through a Real Estate agent

Revalue, Refinance & Repeat
This is the most exciting part of the strategy that ordinary people don’t realize is possible.  If you have ‘Revamped’ your property correctly it will now be worth more than what you paid for it.  What most people don’t understand is that they can actually get instant access to this money.  Simply get your property revalued - then refinance your loan and use this extra equity you have created as the deposit for your next property.  WARNING - Make sure you don’t refinance and then use the money to buy a plasma TV or go on holiday.  Leave that stuff until after your 2nd or 3rd property.  Don’t worry if the idea of refinancing is a little confusing – Chapter 9 (Revalue, Refinance & Repeat) will go into it in much more detail

So now that you know roughly what your plan is you need to decide Where and What to buy?

Let’s start with Where?  What area should you buy your first Investment property?
This is a very important question but please don’t let it be too important.  What I mean is that lots of people get so stressed out about where they should buy, that they end up doing nothing at all.  There are plenty of websites and companies that can give you great information and research about predicted ‘high growth’ areas which can make you hundreds of thousands of dollars down the track.  So definitely take advantage of the resources that are out there.  Another aspect to consider is that if you are going to be spending some time revamping & renovating your property then it would be silly to buy in an area that was a 7 hour drive away.   So do your research and use your common sense.  Most importantly don’t stress too much and try to enjoy the research – It should be fun.

Now the question is What?
This depends entirely on what area you decided to buy in.  You always want to buy a property that is somewhere around ‘the average’ or ‘typical’ property in that area.  Why?  Simply because you want everything to be as easy as possible.  Imagine trying to rent out a brand new mansion in a lower socio-economic area.  You will find it very hard to find a tenant who will have enough money to pay the high rent of a mansion , yet be happy to live in that area.  Also when you are getting your property revalued the banks use ‘comparitable sales’ to decide how much your property is worth.  In other words they look at similar properties in your area and what price they have recently been sold for – If there are no comparitable sales the banks become very reluctant to give you a favorable valuation.

So I would recommend trying to establish what sort of rental properties are the most popular in your chosen area and start focusing your attention on that sort of property.  Anything from a 1 bedroom unit to a family home can be a fantastic investment, just make sure you get the right place in the right area.

So that’s the basic plan of attack, next we need to look at how we can get a bank loan so we can actually buy the property.  We will cover this in Chapter 2. - Getting Your Finance Pre-Approved

How to Buy Your First Investment Property

-A step by step guide-

This is an easy to follow, step by step guide to buying your first investment property. I have split the somewhat daunting task of buying your first property into 9 chapters. Each Chapter will walk you through the process in a simple and easy to follow format. Beginning your Property Portfolio should be a happy and fun experience that you look forward to. Too many people are too scared to take any action simply because they don’t understand how easy it can be. I hope you enjoy this guide and it helps you take your first steps towards financial freedom.

INDEX

1. The Plan – How, What & Where?
2. Get your Finance Pre-Approved
3. Finding the Perfect Investment Property
4. Purchasing the Property
5. How to Buy at a Great Price
6. Waiting for Settlement
7. Revamp/Renovations
8. Leasing out your property
9. Revalue, Refinance and Repeat

Surely everybody has felt this way at some stage?  So what IS the answer?

Whilst there might not be a ‘definitive’ answer to this question - there are definitely better and worse places to begin your quest towards financial freedom.

Robert Kiyosaki (the author of Rich Dad, Poor Dad) talks about the three main vehicles that the rich use to create wealth.  They are as follows

Stock Market

The stock market allows you to ‘buy in’ to a company and in turn receive a ‘share’ of the company’s profits or losses.  Professional Investors generally use the stock market to create cash flow.

Real Estate

Buying Real Estate can be less scary for the novice investor as you are buying a ‘physical thing’.  The ability to ‘leverage’ your money is one of the best features of Property Investing.  Professional Investors generally use Real Estate for long term capital gain

Business

Business can include everything from owning your own business to being employed by someone else.  If you think about it having a job is just like running a business but rather than selling a product you are selling ‘your time’.  Wealthy people use their ‘business’ to help fund their Stock Market & Real Estate investments.

I would like to add a fourth category 

Mindset/Education

Whilst you don’t physically ‘make money’ from this category, there is no way that you can create any amount of wealth without having a strong mindset and knowledge base.

So where should you start?

The first and most important thing you need to do is ask yourself “why do I want to be rich’?  Everyone ‘thinks’ they want to be rich but not many people take the time to explore what they would actually do if money wasn’t an obstacle.  Remember being Wealthy isn’t just about having lots of money.  There are plenty of people who earn millions of dollars a year but don’t have any spare time to see their family or who aren’t actually happy with their life.  To be truly wealthy I believe you need to have abundance and choice in four main areas

1. Financial – have enough money to do everything you dream of
2. Time – be able to spend your time how YOU want
3. Family/Love – have great relationships and a group of people you care about
4. Achievement/Contribution – be proud of who you are and what you have done

So when you ask yourself ‘why do I want to be rich’ make sure your answer includes all of these areas in some way. 

The next thing I would do is ‘Surround yourself with people who have what you want’.

Or in other words educate yourself.  There is plenty of great Wealth Creation information out there and the best part is that a great deal of it is Free.  A little Warning – once you begin learning new investment strategies and Wealth Creation ideas you will no doubt begin to feel liberated and excited.  DON’T let yourself be scared or put off by uniformed people who know less about the subject than you.  Jamie McIntyre talks about the ‘law of opposites’.  In short he is saying “If you want to succeed, you need to figure out what most Australians are doing and do the exact opposite”.  Remember, ‘Surround yourself with people who have what you want’ NOT ‘people who have what you already have’.

The next step is to decide what your first strategy is going to be.  Will you use the Share Market, Real Estate or your Business?  Always remember to start small, don’t try to ‘bite off more than you can chew’ and definitely don’t get too far ahead of yourself.  If you try and go too fast you can end up having a bad experience and it might turn you off Investing for life.  Once you find a strategy that works then repeat it and start looking for  a different strategy to learn.  As Robert Kiyosaki says the Stock market, Real Estate and Business will create the best results when they are employed in unison BUT you need to walk before you can run.  One strategy at a time is definitely the best option.

The final step and by far the hardest and most horrible part of this whole process is to reward yourself!  Celebrating your successes will encourage you to continue your good work and always remember there is much more to being wealthy than having lots of money.  So what are you waiting for?  Take action now, quite simply just  ‘Do Something’.  

Remember “A journey of a thousand miles must begin with a single step” - Lao Tsu