4 Crucial Property Questions To Avoid Investor Overwhelm
Part of being a successful property investor is being able to stay across a lot of moving parts. From analysing the value of different areas or types of property, to understanding inflation and different kinds of loan structures. It’s information overload and at times can feel overwhelming.
Information overload can lead to something we call “analysis paralysis” meaning, with so many decisions to make, you can’t make any. You get stuck, you freeze up and you let opportunities slip away.
Knowing this is normal and everyone feels overwhelmed at times can help, but there are also some practical questions you can ask yourself to stop things getting on top of you.
Am I Happy to Own This Property Forever?
Whether you strike gold with a property that starts generating cash flow and capital growth from day one, or you’re in it for 10-15 years before you start to see some really great cash benefits, is immaterial.
The fact is you don’t know for sure what your property is going to do, so before you buy it you need to ask, am I happy to own this property forever, or as long as it takes? If the answer is no, don’t buy it.
Property investment is a marathon, not a sprint, and if you aren’t in it for the long game, you won’t reap the kinds of rewards you need to generate some passive income and live the life you’re dreaming of.
Does This Property Diversify My Portfolio?
When some property investors start out, many decide to buy in the same location where they live and work. It can feel safer to be able to see the properties you’re buying, in an area you already know.
But a truly booming portfolio is a diverse one. Buying in different areas and economies, having a mix of apartments and houses, and buying in different states, all allow you to benefit in different ways, from different kinds of cash flows and tax breaks. Going with what feels safest, isn’t always smartest.
Will This Property Create Cash Flow?
Your one true aim as a property investor is to own properties that give you passive income, i.e., cash flowing in that you don’t have to work for and that can, in part or entirely, replace your current job.
Properties that do that may not be the ones that increase in capital growth the most, but rather are the properties you can rent out at good rates, and be able to regularly increase those rent rates as the years go on. These are the properties in areas that people want to live and that tenants earn good incomes.
Other properties that can create good cash flow include ones that can be subdivided, so one title but two dwellings, giving you twice the rental income. Look at how your property is going to create cash flow before you buy.
Will This Property Give Me Back My Deposit Amount Quickly?
If you’re looking to create a property portfolio, one of the key strategies is to make back the deposit amount you have put into one property as fast as possible.
As soon as you can pull that equity out of the property to use as the deposit on the next investment property, the faster your portfolio can start to grow and flourish.
Before you make a purchase make sure to do the numbers and have a plan so you know exactly when you can start to move forwards and build your future wealth.
Avoid Overwhelm with Strong Plan
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