Monopoly has long cultivated the property tycoon within all of us, allowing us to imagine for a moment what it would be like to buy, own and sell investment properties. Unfortunately, the stakes tend to be higher in the real world, where a failed investment could have life-changing consequences as opposed to a bruised ego and lack of bragging rights. Ron Bakir is the CEO of Australian urban planning company HomeCorp. With years of experience in the industry, he is well aware of the challenges that new investors face. Taking a leaf out of his book, below you will find five of the signs that indicate whether you’re ready to take the investment plunge.
Purchasing an investment property requires much time, effort and of course, money. The time is right for entering the investment world when you are debt-free and have spare funds to use or are able to borrow interest-free money. Investing in properties involves a certain level of risk, so you have to be prepared to deal with a low or non-existent return on your investment. If you are currently paying off student debts or that overseas trip from two years ago, it is not wise to nose-dive into further debt. Remember that an emergency fund does not count as spare cash either.
Solid Money Management
Money is a central theme when it comes to property investment. Buying the property, paying bills, maintaining it and selling it all revolves around price tags and dollars and cents. So how do you manage your money? Does your balance sheet balance? Are you constantly being hounded by debt collectors or reminder notices? Do you never have enough money at the end of the month? Sensible budgeting and money management can take you a long way, and without it, it is unlikely that you will be able to deal with the burden and stress that comes with owning a property.
Time and Interest
Our lives are filled with many distractions. Work, domestic chores, socialising and hobbies all require a certain amount of your time. Could you add property investment to that list? Would it be categorised under work or hobbies? Patience and research are two necessities when it comes to smart investment. Analysing the market should not be done overnight; instead, you should educate yourself over time, identifying trends and seeking the advice of more experienced individuals. If you have the spare time and are genuinely interested in learning about the industry, you are well-placed to be a successful investor.
Having a positive financial status in the now does not mean that you will have one in the future. Life is notoriously unpredictable, throwing curveball after curveball at us. A huge financial commitment should only be made if you are in stable, long-term employment. If you’re not happy in your current role and things are looking a little uncertain, then now is not the time for you to start adding property investing to your skillset.
What do you think of Ron Bakir’s tips? Have they prompted a few home truths or hard questions? Leave your comment below and share any thoughts, advice or stories that you may have.