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The Key Habit Of Successful Property Investors

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Consider All The Angles

Investopedia lists ten habits of successful property investors, and the top habit on that list is making a plan. In 2016, between October and December, the average cost of homes in major Australian cities was between $345,000 and $920,000. Some markets rose and some fell in that two-month span.

You should understand that your budget must take into account market fluctuation.

You’re going to want to think in this way as you look into the property, as unless such sums are immediately available to you, financing options may be necessary.

That said, having a fairly modest income doesn’t preclude you from reaching your goal; it just means you’re going to need to get creative.

Determining A Strategy

If you’re only pulling in $33k a year, over nineteen years’ income would be necessary to cover such a cost. However, if you were able to save enough to put money down on a property you could rent out, you would be able to increase what you’re able to pay monthly.

Additionally, if you buy a property that doesn’t represent your “end game”, you can more swiftly increase your own personal assets such that you’re able to afford a wider range of potential properties.

The key to this is creating an achievable budget. So maybe instead of budgeting for a $600k+ home right off the bat, you look at something around $150k to $200k.

Look within a specific range, and plan on renting this property out as you live there, paying in yourself. If you could get four other roommates, and all of you paid $500 a month, that’s $2,500 a month, or $30k a year. Including interest, you could potentially pay off such property within four years. You might be able to do it within three.

Getting Started

Provided you maintain the property over that time and get good tenants, all you need is a down-payment and the proper plan beforehand to see total ownership in four years. At that point, you sell the property.

Planning for the unexpected, it’s conceivable that within five years, you could have purchased and sold such a property.

Should you be savvy enough to remodel and refurbish what you own, it may even be worth more than it was when you bought it—or it could be substantially less.

Either way, a $200k property should leave you with $100k after-sale within five years provided you maintain it or renovate before selling; and there’s the potential to profit if the market fluctuates. Still, plan for the opposite.


Seeing Your Plans Succeed

A general rule of thumb is to plan for the worst, hope for the best. In a worst-case scenario of five years managing such a property, you could own it free and clear, sell it, and have more money to put into a future acquisition of a better property either for your family or a repeat of the same earlier strategy. You could buy a property and turn it into a PIG or Passive Income Generator.

With the money from the first, you buy the second and rent it out; netting you anywhere from $500 to $5,000 a month depending on the kind of property you buy, where you buy it, and other factors.

If you’ve been careful to continue saving while you protect your property investment, you could at this point put money down on a third property and use the PIG to pay the mortgage on it, allowing you to devote personal assets elsewhere while building equity.

This is a plan. The key habit of successful property investors is going into the proposition with a strategy like this, but more detailed, and taking into account the market factors. You want to err on the side of caution, expect things to work against you, budget accordingly, and apply these tactics to a plan with a long-term goal in the end.