Michael Quinn 07 February 2017 News
Once you have your first investment property in place (so you have been through the purchasing, financing and tenanting process) then additional properties and the process of obtaining them is a lot more enjoyable and streamlined.
In a way, it is like anything, often the first time is the most challenging.
For many first time investors starting a property portfolio can be daunting. Let’s look at what the top 10 key questions are, as these should be asked before starting to invest in property?
1. What do you want and why?
This involves drilling down on your “Why” and breaking it down and working backwards from the time that you want to stop working to now, what is the dollar amount you want each year in retirement to live off and how are you going to achieve this?
2. What is your current borrowing capacity and how are you going to protect it?
In truth, it all comes back to your borrowing capacity, so understanding what you are able to borrow and having this structured to protect your home, cash flow and ability to repeat/duplicate is vital.
3. What is the population growth of the area you are considering to invest in?
Knowing that you have solid population growth is key, as you know demand does, and will, exist in the future, and you won’t be fighting for your rents. In addition to this, you are able to ride the cycles knowing that people want to live in this location.
4. Does the area you are looking to invest in have multiple income streams/industries?
If you are investing in a capital city, and you have strong population growth then you will have multiple industries/employment and be recession/depression proof. Having your investment property linked to one or two employment hubs is a scary prospect as should one of those industries close down or relocate then you are left competing for tenants.
5. What is the percentage of owner-occupiers to investors?
Rental demand is cash flow, so avoid being in “investor ghettoes” and aim for a maximum of 30% investors.
6. What are your risks?
Look past the “glossy brochure” and review your risks being oversupply, employment, transport, demand, cash flow, quality of the builder etc.
7. Is your finance structure protecting your home and your borrowing capacity?
Finance and the structure of this is very important – get it right first and you won’t need to worry about it again!
8. Is your “A” team in place and across your numbers?
Having the correct professionals as your ‘A” team works to keep you safe, informed and in action.
9. Have you got the right builder?
We have all heard the horror stories – the right builder is essential.
10. Can you use this property investment to duplicate?
The right fundamentals will enable you to use this investment property to help you duplicate in to your next property investment.