With Australia’s current property market and some suburbs having incredibly low house prices, now is the perfect time to consider growing your property investment portfolio!
Many successful investors get the property investment bug, where owning one property is not enough. They keep snapping up properties and eventually start their own property empire, generating huge amounts of wealth and equity.
Owning multiple properties, however, can be tricky and daunting for some. So, if you are thinking of increasing your property portfolio, but aren’t too sure, below are some handy tips on how you can manage and own multiple investment properties.
Tip 1: Utilise the Equity of Your First Investment Property
Using the equity of your first investment property can be a great way to finance your next real estate purchase.
If you paid $300,000 for your initial investment property and it is now valued at $550,000, you then effectively have $250,000 in equity (in this property). You can use this equity and borrow against it (usually up to 80%) as a way to afford your next investment. This means that you don’t have to dig as deep into your own pockets, especially when it comes to taking out a loan and paying it back.
The more properties you acquire over time, the quicker your equity grows and, therefore, the easier it is to afford bigger and better properties.
Tip 2: Seek Professional Financial Advice
Many people are too afraid to invest in multiple properties because of the risk of falling into unescapable debt. However, with the right financial advice and budget strategy in place, your chances of financial ruin are greatly lessened.
When seeking financial advise, make sure your advisor has previous experience in managing multiple property investments. Some of the financial advisers you should have on board can include accountants, mortgage professionals and attorneys. These groups often have access to specialised real estate development software, provide asset protection plans, and know all the current tax deductions available and the most efficient repayment strategies. They can help you find.
With the right financial strategies in place, these advisers can help you find ways to financially support your multiple properties and, hopefully, generate positive cash flow. They can also show you how to put any profits towards paying off your mortgage sooner or reinvesting the money elsewhere.
Tip 3: Buy Discounted Properties in High Growth Suburbs
Property is all about location and buying discounted properties in well-to-do suburbs can be a profitable way to increase your property portfolio and generate equity.
Don’t be daunted by buying a property that needs a little work. With a couple of smart major and minor renovations you can greatly increase the property’s value and reveal a real diamond in the rough!
By increasing a property’s value you can also increase its rental income. As such, you can use the higher rental returns and capital growth to help finance your other property investments and provide you with an income.
Tip 4: Invest in a Property Manager
Investing in multiple properties (let alone one property) requires a lot of time and attention. You need to deal with tenants, keep up-to-date with rental repayments, face continual property maintenance costs and adapt to the changes in the property market. Enlisting in the services of a good property manager can save you having to personally deal with all of this.
Property manager’s also have the necessary experience, resources and connections to help make sure your properties are achieving their maximum potential — especially in term of capital growth, rental returns and over all profits. As such, they can help you generate a greater cash flow to put towards another property purchase.
Tip 5: Don’t Invest All in One Suburb
Never put all your eggs in one basket and never invest all your properties in one suburb.
When it comes to realty just because one suburb is performing really well in the property market doesn’t mean that it will always continue to do so. By spreading out your investment properties, you better your chances of continuously making an overall profit via capital growth and rental growth. If one of the suburbs you have invested in experiences a down turn in the market, at least all your properties won’t simultaneously drop in value.