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What makes a smart property investor?

At Investor Assist we deal with all types of investors from first-timers to experienced investors who have been in the industry for many years. However, just because someone already owns an investment property or two, it does not make them a ‘smart property investor’. We meet many first-timers who already have a great understanding of the industry before they have even purchased their first property, and we come across many seasoned investors who are still making rookie errors.

So, in this White Paper I have decided to outline some of the traits shown by smart property investors. Some are instinctual, some come with time. But if you are able to focus on the 15 attributes outlined below throughout your property investment career, you will be giving yourself the best possible chance of achieving success and financial security.

1. Smart property investors understand the value of education.

It doesn’t matter if you are a first-timer or an experienced investor because there is always more to learn when it comes to investing in property. Some investors (particularly those who have been in the industry for a while) believe they already know everything they need to know and turn their noses up at reading online resources, attending events or seeking expert advice. The industry, the market and the economy are constantly changing and there is always more to learn – don’t be too proud to recognise the value of investing in your property education.

2. Smart property investors research.

Smart property investors don’t only recognise the value of their ongoing education, but they proactively research. They attend seminars and property events, they read online resources, they subscribe to eNewsletters from reputable investment publications and they listen to the opinions of experts. Knowledge is power and you don’t acquire knowledge by doing nothing.

3. Smart property investors don’t do what their friends are doing.

Remember when you were a kid and you always wanted to do what your friends were doing? And your Mum would say, ‘if all your friends jumped off a cliff, would you want to do it too’? The worst thing you can do is listen to your friends at the next BBQ or dinner party you attend and decide to buy an investment property, just because your friend was talking up the benefits of the property they had just purchased and were bragging about what a smart decision they have made. Sure, buying an investment property might be a good choice for you too but there are so many other factors you need to carefully consider including how, when, where, what and how much? You need to invest to suit your own circumstances, not those of your friends or family.

4. Smart property investors dodge the spruikers.

We have all seen the advertisements and read the emails. If a so-called ‘property investment expert’ claims they can show you how to become a multi-millionaire and own hundreds of properties before you reach 25 years of age, you are smart to be sceptical. If you are invited to attend a free seminar but then pressured to sign-up to an investment opportunity that sounds too good to be true, you have probably found yourself a spruiker. They are the type of people who make property investors wary of working with others and thankfully there are less spruikers in the industry now compared to previous years. If you are thinking about working with a property investment company – do your homework. Research their history, how long they have been in operation, their credentials and customer reviews. Look for someone you can trust, not someone who claims they can turn you into an overnight millionaire.

5. Smart property investors surround themselves with experts.

The best thing about being a property investor is that anyone can do it. It doesn’t matter how old you are or what you do for a living. If you want to invest in property, you can. However, this presents its challenges because no one is expected to be an expert in a completely foreign industry. There is a lot to learn about the property industry and the intricacies of investment. This is why smart property investors surround themselves with experts to give them professional advice and guide them in the right direction. This includes investment specialists, financial planners, accountants, finance brokers, builders and property managers. Unless you are a full time investor, chances are you don’t have time in your everyday life to successfully invest without expert advice so don’t be afraid to ask for help from the best in the business. It may cost you a bit extra, but it will be money very well spent.

6. Smart property investors recognise there are investment benefits in any market.

Smart property investors don’t take a ‘wait and see’ approach. So many investors put off investing because they are worried about the market or are waiting for better conditions. Smart property investors recognise there is money to be made in any market and if you have the confidence to invest when others don’t, you can reap the long term rewards when others won’t.

7. Smart property investors let others do the hard work for them.

Often investors (including those who have surrounded themselves with an expert team of advisors) are still determined to do all the hard work and spend countless hours researching the next hotspots, where to invest, potential rental returns and what type of property to buy. If you have a demanding job, a family or enjoy your leisure time – why would you want to spend it researching when there are experts who can do this for you? At Investor Assist, we have Property Investment Specialists who have followed the market for many years and do this exact task all day, every day. Yes, it is important to research and educate yourself and take your responsibilities as an investor seriously. But think about it this way – if you needed to go to the doctor for stitches, would you try to figure out how to do it yourself or leave it up to the expert? Don’t make the task of investing in property harder for yourself – trust the experts and let others do the hard work for you.

8. Smart property investors buy or build a new property.

Smart property investors recognise the benefits of building or buying a brand new property, rather than an older or established property. Generally brand new properties have better design and sustainability features; lower maintenance costs; lower vacancy rates; they attract better tenants; are quality built and have a better resale value. New properties come with structural guarantees and warranties but most importantly, investors can claim full depreciation benefits for brand new properties which has the potential to save you thousands of dollars over the longer term.

9. Smart property investors stay within their means.

One of the worst things a property investor can do is overextend themselves and spent too much on an investment property. Smart property investors spend considerable time and effort to develop a budget and more importantly, they stick to it. They know exactly how much they can spend and look for opportunities that maximise their budget. Don’t get talked into spending too much – it can cause you serious problems in the long run if your personal circumstances change, interest rates rise, your property is without a tenant for a while or you have any unexpected expenses. Only invest what you can comfortably afford.

10. Smart property investors save for a rainy day.

If you have owned a property over the past few years, you have probably enjoyed receiving letters from the bank to advise you of interest rate decreases and to let you know you have less to pay off your mortgage each month. If you are a smart property owner, you have continued to pay off more of your mortgage each month to get ahead or build up a buffer in case you need it. Similar to staying within your means, building up a financial surplus will make sure you are better prepared to deal with any unexpected changes or unforeseen costs.

11. Smart property investors don’t sell.

Smart property investors hold their nerve and don’t panic if the market turns, values drop or the rental market weakens. Smart property investors invest for the long term and understand the market will always go through cycles. What goes up, must come down but historically, property has always increased in value over time. If you are confident you invested wisely, hold your nerve and wait it out.

12. Smart property investors manage their property manager.

Smart property investors recognise the value of an experienced property manager and understand a good property manager can impact the returns of your investment. If you choose wisely, you should find yourself with a proactive property manager who will know your local market, find the best tenants for your property and recommend repairs and maintenance as required. However, smart property investors understand the need to manage their property manager if they are underperforming. Make sure they are doing their job well and not over-charging. Compare rates and seek recommendations. You need to make sure your property (and your property manager) are working for you.

13. Smart property investors make the most of tax time.

End of Financial Year (EOFY) is an important time of year for property investors and smart investors will use it to their advantage and work closely with their accountant to maximise their returns. There are plenty of things to consider before the 30 June arrives including making improvements to the property, pre-paying expenses, claiming full deductions and more. EOFY is also when depreciation comes into play so if you have invested in a new investment property, this is the time of year when you will reap the rewards.

14. Smart property investors reinvest.

Smart property investors don’t just buy one investment property and hope it will significantly increase in value by the time they retire. Smart property investors actively manage their portfolio and look for opportunities to reinvest. You might be surprised at how much equity you have in an existing property or portfolio which can be used to purchase another investment. Keep moving forward and invest without biting off more than you can chew – smart property investors are often holding onto multiple investment properties by the time they retire.

15. Smart property investors look long term.

Just as smart property investors don’t sell, smart property investors are also looking long term. Smart property investors recognise that property investment is not a ‘get rich quick scheme’ and only those who have patience and are willing to invest for the long term will prosper. Sure, there will always be stories of investors who make impressive gains in just one or two years but this is not the result you should be seeking. Property investment is a viable and proven way you can achieve financial security in the longer term. So be patient – good things come to those who wait.

To find out how you can get started with your own investment journey, or to see if your current investments are working for you, contact the expert Property Investment Specialists at Investor Assist