For getting started as beginner residential property investor what obstacles have you to overcome, what are the nagging questions, and where to find help and expert advice?
Wanting to be a Property Investor
How to get started as Beginner Investor?
Everyone is a beginner at some stage
Getting ready for investing in residential properties is the toughest people might face, because there are obstacles to overcome like the limitation of time, finance, confidence (or knowledge) and lots of nagging questions about abilities, uncertainties and risks.
To encourage you I illustrated in this block post my first steps for investing in properties by using three simple rules. And, I have been following the same principles since. Always remember; investments have to produce income, never lose control over your investment (asset) and use leverage to overcome obstacles.
When people first starting out, they are going to hear lots of conflicting information from lobbying groups, businesses driving the property market and the stamina that it takes large amounts of work to be successful. Success never happens overnight.
And then I wrote “Less matured property investors with small pockets and little energy to do the hard and time consuming work are most receptive to coaching programs or even worse getting drawn in by sophisticated property spruikers who promise to take your starting capital for making you “millions over night” to retire in luxury.”
Why do I tell you this? I can guarantee you are going to make mistakes along the way and have to deal with frustrations just as part of the journey. However, the rewards in the end are worth the hours of hard work, pain and frustration.
Beginner’s help and steps forward
Seeking help you need to figure out what your problem really is. Lack of confidence, maturity, or knowledge require different solutions. Finding someone who takes the hurdles off you might be very difficult. However, if you defined your goal e.g. “to own in 10 years time properties 10 million Dollars worth”, well - then you could search for mentoring programs that can deliver. And if not, you have to change your approach. Don’t get me wrong, courses or coaching programs might suit your needs if you know what you want to achieve. Compare it with Olympic competitions, if you want to beat the world elite, you will need a trainer and deep pockets. I did it differently.
Before purchasing my family home, I was renting for more than 20 years. So I did know the specifics of a good rental by looking at houses with renter’s eyes. When buying my first property investment after the September 11 attacks in 2001, I trusted my common sense and instinct. And still a true point today, good properties buy and sell in any market. The only rule I followed at the time was an investment must generate income. This essential rule helped me to compensate all the mistakes I made so far.
The other two basic rules for building up a property portfolio I figured out by congregating with like minded people, joined the property investor association and became an active property investor just by doing. Needless to say, when working as IT professional and managing property investments I run out of time. Subsequently the decision to quit my day job was actually nerve-racking for my wife, but not so if you love what you are doing, right?
Building up a property investment business included forming a team with people to exchange creativity and intellectual property like agents, lawyers, builders, accountants, etc. Sure, a mentor might be able to help accelerating results but still you will be in the driver seat responsible for success and failure.
I would say that people, who lost an investment managed by paid people in control, are more cautious, also when it comes to seducing offers and promises with very high returns made by investment scammers. Similar misleading is selling obsolete information via subscriptions for books, DVDs and financial products (schemes). I still get emails, phone calls and enticing invitations to join other people’s party. Be confident, if you can master some of these precautions, you are halfway there where you want to be.
Housing Market—what do you need to know
The housing market has always been polarised in the media and the playground for politicians to attract voters. Everyone is affected because people have to live somewhere. And the “have-nots” will continue to blame the “haves” regardless any matters. Investing in properties, you are going to be a target, too. That is not a problem as long as you make informed decisions.
The housing market is the reflection of the economy driven by the law of supply and demand. Consider the scarcity value of land, the demand of housing in areas with jobs and economic growth and understand the impact of the finance industry (interest rates, inflation, taxation) on property investments, loss and profit.
Know the basics for buy-and-hold and trading strategies and use them to generate cash-flow and build up equity. For instance renovating to build-up equity works in all market conditions. You can read a lot about the “property clock” or property cycle. Well, often misunderstood, there is not “one” property market, in fact each country, each region and each suburb has its own property cycle.
Compare New Zealand with Australia, Auckland with Wellington, cities with suburban areas— you will figure out differences.
Expert advice worth spent money?
Even the experts only get it right slightly more then they get it wrong. When taking advice from somebody, check out their background and understand what pays those people’s bills. Are they active investors or do they derive income from selling something else? Learn to identify good selling stories, especially when having a frenzy about something. Remember those stories are to pay their bills or may initiate predatory buying practices.
I do not necessarily agree with the academics. They have continuously failed to predict the economic future, or why then did nobody see the financial crisis (GFC) in 2007 coming? My point here is – only you know your destiny and what is best for you. If you have some spare money, go on holiday or invest in knowledge for making better decisions—either way, enjoy your life. Good luck.
Klauster Blogs lead to a real person, IT professional, investor, landlord and business owner with interests in technologies, properties and trading.
His passion, making experiences available and helping people like you, comes from extensive travelling and the principles of life—how to avoid pitfalls in unfamiliar territory when investing or forming relationships.
The philosophy to treat life, partnerships and hobbies as an investment has helped people in his circle. Life is a dream with a deadline, happiness comes from making the right choices and having realistic expectations.
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