Are you still making these excuses?
I don’t have enough depositA lot of people believe that starting a property portfolio is difficult because they have to come up with the initial deposit and buying costs says Zoran Solano, senior buyer’s agent with Hot Property Buyer’s Agency. With many lenders tightening their lending criteria and imposing strict rules around genuine savings deposits, it may feel like investing is out of reach. “The reality is, there are ways to quickly come up with a deposit creatively,” says Solano. “You can take a loan from a family member or ask your parents to stump up part of the deposit. You just need to look at different solutions to this problem.”
I lack knowledge about the marketAnother common excuse for beginner investors is the lack of knowledge and not knowing how to get started, according to Solano. “People don’t know what is a good investment and what isn’t. They’re not confident they’ll choose the right property for them,” says Solano. The good news is, there are now so many resources you can tap and they’re free, such as this website. Property buyers are also invaluable in helping you navigate the market.
I’m afraid of losing moneyLet’s face it. Fear of failure is a big challenge for a lot of people. If you fail, you could lose a big chunk of your nest egg. This is not an easy hurdle to get over. As someone who struggled with fear of investing for a long time, I can speak from experience that most of the fears that you might have can be mitigated and they’re often worse in your head than in real life. You just need to identify what you’re afraid of. For example, if you’re worried about buying a poor investment, then you can either employ a buyer’s agent to help you out or get educated about the market. It’s also worth noting that property remains the least risky investment asset compared to other asset classes. It’s forgiving, as long as you give it time. Even if you bought an underperformer, you’re unlikely to lose money as long as you hold it over the long term.
I’m not rich enoughAnother overused excuse is the idea that you need to be rich to invest in property. The truth is, while you need a deposit and buying cost to start with, you don’t have to be loaded before you can invest. Lenders are looking for borrowers who can afford to pay off their loans but who can also manage their cash. So if you’ve been consistently saving and investing most of your income, you’re likely to get approved for a loan compared to those earning more money but have little savings or investments to show for it. “Let me put it this way, if you go to a car dealer and purchase a $50,000 brand new car, your repayments could be around $110 per week. If you can afford this, you can afford to own an investment property. I can say from personal experience that my investment properties don’t cost me $110 per week. They make more than that in cash flow and in capital growth,” says Solano.
Property will tie me up and crimp my lifestyleMost people think a property will tie them down as they have to maintain it, pay the mortgage and look after the tenants. They think it’s going to cost money which means they’ve got little left for other things. “This notion is particularly true with the younger generation where they want everything straight away and they don’t see that buying a property makes them money, or it if does, then it will take a long time,” explains Gray. “They don’t see it as worth sacrificing something to get it. But if they buy a property that then goes up by 10% and they make $25,000–50,000 in value, then that would easily pay for their holidays, their car, shoes or whatever else they want to buy. “It’s a matter of getting through that initial sacrifice of maybe one or two years while the property grows in value and suddenly, you’re ahead.”
It’s too hard and complicatedIf you’re just starting out, property investing may seem daunting. There are so many concepts you need to learn in a hurry. You need to understand how the property market works, plus have a good grasp of the various mortgages and strategies available. And then you need to find the area to buy in, and choose the right property. The key to avoid getting overwhelmed at the start is simply to break it down says Gray. “Just like everything, you just need to break it down into little steps and do one thing after the other,” Gray advises. There are plenty of books and websites telling you how to do it. So rather than tackling 20 steps and getting overwhelmed and frustrated, just do the first one. Once you’ve done that, do the next one. “Just like running a marathon, you need to learn to jog a kilometre to start with. Then do two or three kilometres. Before you know it you’ve done the full 42 kilometres,” says Gray.
Top insider tips for getting started nowStart saving straight away
It may take you six to 12 months to save a deposit, but the sooner you get started, the faster you will gather it.
Get educated while saving for a deposit
While you’re waiting for your savings to grow, use this time to immerse yourself in the market and learn everything you can. No knowledge is ever wasted. By the time you’re ready to buy, you’ve learned enough to be able to do it yourself confidently.
Just keep taking the next step, no matter how small
No matter how many steps are required, just keep taking the next step. Don’t get bogged down with the thought of so many steps ahead of you. Just get on and start saving and once you’ve done that, take the next step. Learn the next concept.