Top 10 Things a Newbie Property Investor should do?

[Marc]

Hey community,

Please contribute to the "Top 10 Things a Newbie Property Investor should do:" list below..

Top 10 Things a Newbie Property Investor should do:

1) Get a good accountant to help with creating and managing the right financial structures for your investment portfolio..

Cheers

Marc

[Re@der]

2. Have a good read through PT

[Marc]

2. Have a good read through PT

Cool! Now we need another 7

I will PM Dean, Olly and a couple others to see if they can help.

Cheers

Marc

[orion]

There are many strategies and various "how to's" to succeeding in property investment, but to me the individual's mindset would be the number 1 priority. If this is not in a good place to start with, nothing else will really matter long term.

Regards
Graeme Fowler

[mattnz]

3. Spend as much time looking at rental demand for properties in the area you plan to buy in, as you do looking at properties for sale.

I had a shock today when I started doing this. I have been looking at inner city 2 bed luxury apartments in Sydney in the 550k - 600k range. Many of them are currently renting for $720-800 per week which makes them cashflow positive.

While I was waiting to see one for sale I saw a sign for a rental open home. Went in to find I was the only person viewing it, it had been on the market for 2 weeks and they had dropped the rental rate to $680 per week and still not even getting people viewing, let alone leasing it.

It was fully furnished (nice leather lounge suite, 40 inch tv and all the rest, beautiful), with amazing views over Hyde Park, the Cathedral and out over Sydney Harbour. It was far nicer than anything I was looking at to buy. This was the apartment (listed at $720, but agent said $680 would get it. The photos don't do it justice).

http://www.domain.com.au/Public/Prop...?adid=6073025#

It gave me a real wake up call how careful you need to be in the current environment, not to rely on historical rent prices as they could easily drop significantly in the next few months.

[Marc]

AWESOME! Keep it coming!

I will re-print the list this Monday and see what we have to date.

Cheers

marc

[Dean@Massiveaction]

My rules for newbies never change.
1. Decide why you want to invest, be sure that property investing is for you.
2. Whether through books, mentors or experienced friends set strict goals and rules before you start.

Once you've done 1 and 2 you will have had a thousand questions answered and be ready to actually start loking at property.

3. STICK TO YOUR RULES AND REGULARLY MONITOR YOUR PROGRESS TOWARDS YOUR GOALS!!

[OllyN]

10 steps - part 1

1. Get rich slowly. Better miss out on a 100 deals than make one mistake
2. Buy the land. The improvements can be changed but not the land.
3. Every investment must have rental return plus capital gain running together even if out of step from time to time.
4. Treat your tenants like cattle. Keep them happy and contented and they will reward you. Mistreat them and they will wander off.
5.Take action, The thinking is always harder then the doing.
6. Don't do business with friends or relatives- money does strange things to the mind.
7. Buy in areas you know well or have researched.
8. Don't develop or buy off the plans.
9. Multiple tenancies are better than single tenancies.
10. Get good advice from experts and expect to pay for it.

and for luck

11. Keep well away from get-rich-quick seminars and spruikers.
12. For residential - avoid leasehold land.
13. Use agents to select your tenants, but manage them yourself.
14. Don't cheat on the IRD- they have big teeth.
15. Investment is about timing - there is a time to sell and a time to buy.
16. The property clock is useless in the current climate.
17. Don't borrow more than 80% of current value.
18. Never trust a bank.
19. There is always another deal.
20. Never give up.
21. Don't become an empire builder. Consolidation is the same as growth.
22. Never fall in love with a deal. It's strictly business.
23. Be content with getting 8 out of 10 right. Some deals do go wrong ,
24. Always get a second opinion from an independent source ( valuer, consultant etc )
25. Any one preaching religion, huge wealth creation, instant riches, 100% guarantees, free 'add-ons", sure fire deals, or offering to sell you bargains
that they just happen to have, are to be avoided at all costs.
26. There is no such thing as "hot spots". The numbers are all that matter.

parts 2, 3 and 4 later

[freezinhot]

Hi Olly

I like your tips, Great for the office board.

FH

[Rosco]

A newbie could look at Trading or Long term holds, or a combination of both.

If anyone is looking at Long Term Holds they need to look long term, ie hold for 5,10 or 20 years. So investors need to look at what will a property be like in 10 or 20 years!

[Orkibi]

Get your finance sorted that you can move as a cash buyer.

work on relationships with colleague like other investors and agents, be honest and stick to your word.!

[OllyN]

10 steps - part 2

1. Always look at property in wet weather - at its worst.
2. Scrutinise the neighbourhood
3. Take a camera or video with you and record everything. You will never remember on your own
4. Always check a prospective tenants testimonials. They may be false.
5. Keep away from property where a s.c.flats has been created- it may be illegal.
6. Under no circumstances buy a property where it has been tenanted room by room to increase the illusion of a higher cash return. There are major issues here.
7. Anyone holding themselves out as an "expert" advisor must have had at least 15 years full time experience, plus qualifications, and be able to produce a Disclosure Statement on demand.
8. Decide early on whether you want to be a trader or a long term holder ( or both). Requires the proper set up.
9. Don't rely on LAQC companies to save tax. They are under investigation.
10. Don't ever buy new built property as an investment. You are paying maximum price plus GST.

and for luck

11. Always pay your interest on time.
12. Avoid rolled up or deferred interest .
13. Always buy property made of traditional materials. Wood, concrete, stone
steel etc . No mono-clad should be touched whatever guarantees are given.
14. Anyone selling you the story that you will get rich by buying in another country is lying. If it were true why do they need to sell here?
15. Don't become a slum landlord.
16. Quality is more important than quantity
17. Keep away for small towns, beach and lake sides or tourist resorts whatever the promises of high returns.
18. Get good advice and be prepared to pay for it.
19. Cross lease is not leasehold.
20. Freehold does not mean "paid off"


more later in parts 3 & 4

[nzfrazer]

Great stuff Olly - keep 'em coming

[muppet]

Observe or be aware of the 100:10:3:1 Rule.

Look at 100 properties, put offers in on 10, and try to arrange financing for 3, you may end up buying 1. (Thanks to Dolf de Roos)

[NZGEMS]

get to know the market, assuming you are going into residential, get out every weekend and look at open homes, I did this for TWO years before I purcahsed, actually that was a lie, I purchased 2 after a year at 70% of value and kept looking for another year at open homes and read books, the first year after deciding I was going to get into it, I started educating myself like courses and reading, it was at a Dolf de Roos course I was told to look at open homes and I felt this was great advise so I always pass it on, I purchased the 2 properties at 70% of value 2 months after dolf settled 4 months after but at the time stopped then as the banks said on more and in those days I was a good girl and did what I was told. not now though. I am just determined to make all my dreams reality.