| by Kenneth Chase | 11 comments

Property Investment In Australia For Beginners: 10 Steps (Ep191)

Property investment can be so complicated.
They can be really difficult for beginners to know where to start. So today I want to
provide some tips for property investment in Australia for beginners. Hi, I’m Ryan McLane from onproperty.com.au
your daily ties a property education and inspiration. Every single day almost without failure we
release a new video, podcast, and article. And you can check everything out by going
to onproperty.com.au. When you are a beginner in the property space it can be completely
overwhelming. There are so many different strategies that you need to look at. So many
different ways to invest. So many different areas that you can invest in. And even researching
an area and trying to work if it’s going to be a good investment feel so hazy and it feels
like putting a hundred thousand dollars on red at the Casino. It’s just so difficult
to know exactly where to get started and how to get down this road that is property investing.
So today I just wanted to give you 10 different tips if you are a beginner to help me down
this property investing journey and I guess to give you some sort of framework that you
can work with. Tip #1 is to know how people make money through
investment property. So rather than thinking oh I want to be rich I want to make money
in property it is a good ideas to actually sit down and learn how people make money in
property. Generally no matter what strategy people are using there is 3 different ways
they make money. They either make it through growth in their assets itself which is called
capital gains. They make it through income which comes from the rental income being more
than the expenses we call it positive cash flow or it comes from tax benefits and so
again depreciation and things like that can help offset the tax that you have to pay in
your employment or whatever income you derive to for yourself. You learn more about the
three different ways that people make money by going to www.onproperty.com.au/175 where
I did the full episode about it. By knowing how people make money is a good overarching
concept to have when you go to look at which strategy is going to work best for me. Tip #2 before you actually go out and start
looking at investing in property is actually sitting down either by yourself or with your
spouse if you are doing this together and set some financial goals. Understand what
you want your life to be like and where you want to go. And so for me my financial goal
is $60,000 a year in passive income. And the reason I set that goal was that $60,000 a
year is not a lot of money but it’s enough that we can live off without someone having
to work and you know we can get by on that. I plan once we hit that $60,000 obviously
to continue forward but the first goal is definitely $60,000. Actually I always wanted
to achieve it before I was 30 that’s about three and a half years away so whether or
not that will happen is you know maybe not but even if it takes me 20 years I am now
26 now and in twenty years I’ll be 46 that’s still 19 years before most people retire so
I for me the timescale is like as I can afford it and as I can do it but for a lot of people
it’s a great idea to set a time frame of five years or ten years or twenty years whatever
it might be because that will then help you choose the right investment strategy for you. Tip #3 it is to then go ahead and choose your
investment strategy. Now if you are a beginner in a property space this is going to be pretty
difficult for you to do it because you don’t know what investment strategies are out there.
So I do suggest reading some books and reading about some investment strategies but read
them knowing that you are not going to decide on that investment strategy. Books can be
very encouraging but they can be very convincing as well and so you read one book on one strategy
and it’s like that’s it, I want to do that and you read another book on another strategy
and it’s like no I want to do this and then you just chop and change. I think it is good
to collect a bunch of different strategies, learn about a bunch different strategies and
then think about your financial goal what you want to achieve and where you are and
choose the strategy that suits you before you even go out and look at properties. Tip #4 is to be aware of salesman. You are
looking to do a property investment in Australia and you are beginner then chances are you
are going to stumble upon some companies that can offer you investment advice . Now you
need to be careful of some of these companies because of the way that they derive money.
They are not actually financial advisors but some of them are but the way they make money
is generally through commissions on the properties that they sell. So if someone is talking to
you and wanting to be an advisor for you but you need to purchase property through them
and its all new built property well they are actually going to be making some pretty hefty
commissions on top of that which is coming out of your pocket. So what that means is
often beginners get sucked into buying new build properties that are overpriced for the
area and they get less without any capital growth and actually have to wait for years
for the market to catch up with them. So be aware of salesmen and again that comes back
to knowing the different strategies. Tip #5 would be to decide on a strategy. So
as I said before you go out and start looking at property actually read about strategies
but then decide on which strategy you are going to go after. If you keep changing your
mind and you only invest with one strategy you are probably never going to get good at
it. But if you choose one strategy and find a way to make it profitable well then you
can rinse and repeat with future properties once you decide on a strategy. Tip #6 for me would be to go and see a mortgage
broker. The reason I recommend that you go and see a mortgage broker before you even
start looking at property is that a mortgage broker will give you an idea of how much you
can actually borrow and kind of deposit you need to save realistically in order to buy
a property. A lot of us go in and we think that we need to save 5% or 10% or 20% but
we don’t think of stamp duty, solicitor’s fees, extra mortgage costs insurance and all
this other stuff we forget about. So a mortgage broker will help you understand how much you
can borrow and how much you need to save so that you can have a goal to move towards.
If you want to get in contact with my mortgage broker then go to www.onproperty.com.au/mortgage
and fill out the little former over there and my mortgage broker will give you a call. Tip #7 is to then do some recon work or some
suburb analysis work. Learn how to research an area and look at a few different areas
and research them. What the population is like is it growing or declining? What are
the economics of the area is there any gentrification going on in the area where richer people are
moving in and thus improving a suburb? Doing this research and understanding I guess suburb
dynamics and how suburbs grow can help you to choose a suburb that is primed for growth
and increase your chances of getting a great return on investment. If you want a full course
on how to research an area then I do have a course inside on property plus which is
my membership site. You can check out on property plus by going to www.onproperty.com.au/plus
It is currently at $20 per month or $200 per year and has a whole bunch of added bonus
in there as well that you can go check out if you are interested. Tip #8 is to play make-believe or the more
boring way of saying that is to do cash flow analysis. So in this stage you are doing research
into properties. You are looking to buy a property but you are not actually looking
to buy it. What you want to do is pretend you are going to buy it and therefore do all
the research that you would do on it. Do a cash flow analysis on the property. Do that
recon work into the suburbs. Look for value-added opportunities. All these sort of stuff and
work out whether this property is actually going to deliver a return on investment or
not. I have done full episodes on how you can calculate positive cash flow property
or how you can calculate the cash flow or property and I will link up so that in this
article. But if you want all that can actually help you do the cash flow analysis yourself
then again that’s a part of the on property plus membership which you can check out at
www.onproperty.com.au/plus . So that’s a web-based program that you log into and you then get
access to all these calculators that you can use to analyze property. This makes those
steps so much easier. Tip #9 is when you have done some research
and you are feeling comfortable in the market. Before you go and make an offer on a property
get pre-approval from your mortgage broker. So by doing that what you do is you choose
a loan basically you get pre-approval for that loan. And what I mean is that you have
approval based on the valuation of the property. And so this means that when you do find a
property and you do make an offer, the time period from making your offer to getting your
loan fully approved is so much smaller. So it’s a really great thing to do. And then step #10 is to start making offers.
I used to (actually I still do) make offers on properties that I am not necessarily going
to buy I don’t do it a lot but I like to explore the market and to see what it’s like. I remember
back when I was looking at investing and I would make offers without even seeing the
property because I wanted to hone negotiation skills and I wanted to become more aware of
the market and more aware of how to negotiate. And so I think that’s a great thing to do
it and I think you shouldn’t do it a lot with the same real estate agent obviously don’t
want to piss people off and so I do it sporadically here and there. But if I am excited by a potential
deal I always like to go down that rabbit hole of making an offer and to see if I could
finance it and most of the time the answer is no I couldn’t actually finance it. But
it is still fun to do anyway and it is less nerve-wracking when it is time for me to make
an offer and to buy my first property. I am going to be confident in making that offer
and I’m not going to be scared to do it. So there are some tips that you have if you’re
looking at property investment in Australia and you’re a beginner investor. I hope that’s
kind of giving you some tips to maybe make this property investing thing a little bit
less intimidating. There is still a lot to learn but I guess that’s why I’m here that’s
why my website exists to help you learn more about investing in property. And every single
day we release a new video, article and podcast so you can keep learning with us and come
back every single day or whenever you have free time. So until tomorrow remember that
your long-term success is only achieved one day at a time.


Alan Boy

Nov 11, 2014, 1:45 pm Reply

very useful! thanks

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giving out lots of advice. thanks

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Apr 4, 2017, 9:53 pm Reply

Really great advice. Definitely coming back every now and then just to check I'm doing it right. Thanks mate

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Dec 12, 2018, 10:03 am Reply

No, Pre-approval is indicative and provides no guarantee of loan. Also banks will not just do a random valuation unless they are confident you will purchase the property. So valuation will occur after contract has been signed and your conveyancer will include a clause in the contract stating loan will be approved subject to finance and bank valuation. This is the general process.

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