There are five steps you need to follow to maximise your chances of safely building a high performance property portfolio.
Prioritise and make the time to educate yourself. By reading a couple of books, or attending a workshop, you can learn most of what you need to get started in property.
I also strongly encourage people to spend a similar amount of time educating yourself about the different types of advisers and how they can help you. Understanding who can help you the most can be more important than knowing the specifics of how to do it yourself.
2. Property advice
If you want to invest in property, a good property investment adviser can be incredibly valuable.
Financial planners are good for advice on financial products like managed funds, superannuation and insurance. A good financial planner will help advise how these other investments and insurances can complement your property investment goals, while a property adviser specialises and focuses their time on property specific investment aspects.
Be aware that property investment advice is not yet regulated in Australia. There’s a huge amount of advice on offer, ranging from poor advice property spruiking, to high-quality advice. Many of the spruikers sell overpriced, high-risk, ‘off the plan’ property without advising what the huge risks are – this can be a great way to help identify a spruiker from a good adviser. If you are offered ‘off the plan’ property without being informed that it could send you bankrupt, walk the other way.
A good property adviser can help introduce and effectively integrate the advice from your financial planner, mortgage broker, lawyer and accountant.
Research is critical to improving returns with property. Good research can help identify growth markets (such as Darwin and Perth 10 years ago) and good property advisers should be able to show you research from independent, highly capable sources like BIS Shrapnel who have very experienced economists. This type of research is worth its weight in gold, but is just the starting point for a good adviser.
Macro research identifies the ideal city or region to invest, but should be integrated into a strategy to aid diversification and avoid or minimise land tax. A detailed analysis of micro economic factors should then be used to identify the ideal town or suburb to invest in, followed by selection of the property that best suits the demographic demands in the ideal price point for your strategy and structure.
Look out for next month’s article for a summary of the final three steps to building a safe high performance property portfolio, or call the office to discuss how we can help.
Richard Sheppard is the Managing Director of inSynergy Property and Finance Solutions. inSynergy provides professional property investment advice, property market research, specialised mortgage broking services and is an accredited investment property buyers’ agent. Visit www.insynergy.net.au or phone 1300 308 808.