The current Australian property market may deter a lot of investors from increasing their property portfolio, especially if one abides by mainstream media. There are many factors to consider when building a property portfolio, none of which should be looked at in isolation. Long term property investment rides through storms (and sunny days), so as long as you follow your strategy, the right property is out there for you.

Whether you are a beginner in property investment or are well on your way to building a property portfolio, the following 7 rules will ensure you are on track to success:

  1. Get Advice: The first and foremost thing is to make sure you are surrounded by the right support team. This team of accountants, mortgage brokers, buyers agents, property managers, lawyers etc will help you understand the complete property picture. In particular, find a professional who specialises in property investment. For example, an accountant who specialises in property investment will ensure you are structured in the right way to achieve asset protection and provide you with the most tax effective returns.
  2. Plan:Successful property investment requires you to set goals, both short term and long term. You must always start with the end in mind and ensure each step in your investment journey is taken towards that goal. Of course goals change as your personal circumstances change. By staying in regular contact with your support team, you are collectively able to adjust the goal posts accordingly. One cannot plan for success without a successful plan!
  3. Invest with your Head Not Your Heart:When purchasing an investment property, the decision making process is very different to that when purchasing your home. When purchasing an investment property, you must stick to a clear list of prerequisites created in you plan. Allowing your emotions to guide decisions can cloud your judgement and lead to purchasing a property that is not in line with your strategy.
  1. Get your timing right:If you rush into decisions or expect to be a millionaire overnight, you are bound to make a mistake with the properties you choose. On the other hand, if you are over cautious, you may miss out on great opportunities. You need to find the right balance of sufficient research to have comfort with your decisions, regardless of the market.
  2. Maintain a Budget:The cash flow from acquiring and holding a property is vital to understand. It’s not only about paying the loan, but also around upkeep, insurance, regular outgoings, tax, unforeseen expenses….. How much income will your investment generate and will it be enough to cover your outgoings? How will you supplement negative gearing? Have you got enough in reserve to manage any extended vacancy periods or unexpected maintenance costs? The budget will allow you to make informed decisions such as re-financing, selling or varying rent.
  3. Secure the Right Finance:As mentioned above, financing options are limited at the moment, making it difficult to find the right lender. Mortgage brokers can be incredibly useful as they have the inside knowledge within the lending industry and will not waste your time with unsuitable lenders. Setting up an incorrect financial structure can cost you thousands in the long run. The right finance will be secured through effective interaction between your broker, accountant and solicitor.
  4. Property Management:Many investors choose to self-manage their portfolio as a means to save money. Although this may sound like a feasible plan initially, if your goal is to own multiple properties this will become a full-time job and may leave you exposed. A licensed property manager will ensure you have qualified & suitable tenants, knowledge of the laws pertaining to renting, regular inspections, rent collection, representation at the tribunal should something go wrong, and round the clock contact for your tenants. You can then put your time to building your portfolio, not managing it!

Most investors will make a mistake at some point and will always have that 1 property in their investment portfolio where, with hindsight, would have done something differently. That is ok, as long as you learn from your mistakes and are not too scared to jump back into the market.

If you want to get your investment property portfolio onto the right tract, please email Ania on ania@msba.com.au or call on (02) 9580-4055.