You often hear stories about young investors who owned five investment properties before they turned 25 or 30-year-old property-made millionaires.
And you may have seen the Australian Financial Review article, Meet the Young Rich Lister building an entire suburb, about former AFL player-cum-property guru Andrew Welsh, who traded his keen hand-eye coordination skills on the field to the property development market.
So it is possible. And sometimes it is a case of the earlier your start, the better. By beginning your investor journey when you’re younger you can gain early long-term benefits.
However, it doesn’t mean it’s easy, and of course, like any investor, you may face obstacles and challenges along the way.
Our seven tips for young investors can help you tackle these obstacles and maximise the opportunity of getting in early and investing from a young age.
1. Balance your wants and needs
If only for the short term, pull back on the luxuries and “I wants” and focus on the “I needs”. Make a few temporary sacrifices to ensure you’re financially prepared to buy your investment property. This could include:
- Altering your living arrangements – if you’re renting, get an extra flatmate, find lower-rent housing, or move in with your parents/friends
- House-sitting – rent-free!
- Cutting back on eating out – cook more, take your lunch to work, or if you do eat out, take advantage of specials, happy hours, two-for-one offers
- Cutting back on luxury items and entertainment – or, take advantage of Perth’s free events and entertainment
- Taking a second job on the weekend or nights
2. Learn about property investing
Read, talk and read some more. Learn from other investors who started investing in property at a young age or who began investing on a low income. They can not only give you great insights and knowledge about property investment, but their first-hand experience will give you real information about real situations, tips on what to look out for, mistakes they may’ve made, and how to avoid them.
3. Know your strategy
Before you even think about the type of property you’re after, think about the type of strategy that best suits you. Understand the different types of strategies and which would work best for you:
- Capital growth
- Positive cash flow
Then develop a comprehensive strategy that includes the type of property you plan to invest in, how much money you can afford to spend, and any other financial considerations.
4. Find a dynamite mortgage broker
A mortgage broker can guide you through the financial process of purchasing an investment property and help you take the right steps to start your property investment journey.
They can do all the legwork to help you find the right loan, guide you through the application process, help you apply for government grants or incentives you may be entitled to, and keep you up to date on the progress of your application.
5. Show off your squeaky-clean credit history
Demonstrate a strong financial track record. Pay all your bills and loan payments on time. If you consistently miss payment deadlines, it doesn’t give lenders confidence in your ability to pay your mortgage repayments. On the contrary, if you consistently make all your payments, it gives lenders great confidence in your ability to manage mortgage repayments, and therefore increases your chance of getting a home loan.
6. Learn to negotiate
It doesn’t come naturally to everyone, but negotiating is a vital skill for all property investors. Knowing how to effectively negotiate improves your chance of getting the best prices on a property.
Practise negotiating so you build your confidence that you have the upper hand in your investment conversations.
7. It’s a journey
And finally, it might sound like a cliché, but it’s true. Reaping the rewards of property investment doesn’t happen rapidly. It takes knowledge, time, and therefore, patience.
While you may enjoy some small gains reasonably quickly, ultimately, you should be thinking long-term, and looking at a 10-20-year investment plan when starting your portfolio.
So, if you’re starting to think about how to get into Perth’s property market or would like to learn more about property investment in Perth, why not complete our Getting Started form to get the ball rolling.
Or, if you’re ready to invest, why not read our free Get Ready to Invest in Property eBook.
It takes you through five simple steps to help you understand strategic property investment and how to make it work for you. Whether you’re a first-time investor or re-entering the market, it will help you navigate the sometimes complex world of property investment and associated issues you need to consider.
You will learn how to:
- CREATE YOUR WEALTH PLAN & INVESTMENT STRATEGY
- ASSESS YOUR FINANCIAL POSITION & FIND THE RIGHT LOAN
- RESEARCH THE MARKET & CREATE A SHORTLIST
- MINIMISE RISK & CONDUCT DUE DILIGENCE
- ADD VALUE TO INCREASE RETURNS
It will then give you a few insights into GETTING STARTED.
So if you’re ready to learn some great insights into getting started in property investment, download your free Get Ready to Invest in Property eBook here.
We think you’ll find it invaluable.