Once you know exactly what you want to achieve and why, understand your cash flow and have made a commitment to yourself around the amount of money you are going to allocate to investing and building your financial future, you are ready to get started.
In building your portfolio you have two choices:
- spend hours trying to become an expert in every aspect of the property investment journey to ensure its a success
- build a team of experts you trust and respect, who can give you advice and guidance to support your journey
If your family and friends are not successful experienced investors, they may struggle to provide the support you seek. Finding like-minded individuals can help keep you on track, ultimately allowing you to achieve your goals and dreams. Instead of taking advice from a friend at the pub or an uncle at the family BBQ, find a team of experts who share your vision. Their experience and expertise will ensure you are always guided in the right direction.
Building your own team of experts:
When choosing the right Property Investment team of experts to partner with, ensure they have a solid understanding and experience supporting investors. Look for experts who have personally achieved what you want to achieve, and know that sometimes even a qualification is not enough.
Plenty of accountants and financial planners that don’t have any wealth. Still, these are the individuals people usually trust for advice. Qualifications look good on paper, but actual achievements provide proof of success. You want to be confident that your chosen team is working with property investors every day and has a great track record of successfully helping their clients to achieve the results you are looking for.
If you want to successfully build a strong property portfolio that will allow you to have the lifestyle and retirement you desire, then this is the team of experts you will need in your corner:
A Qualified Mortgage Broker
Finance is essential for you to be able to build a property portfolio. Your ability to access the finance you need will dictate the pace at which you can build your wealth.
As a mortgage broker, I understand the importance of having the right finance structure, products and lenders to support your goals. Every lender has different policies and products and the right mortgage broker will be able to show you how to:
- minimise your interest expense
- minimise fees (by ensuring you only pay for the loan features you need).
- maximise your borrowing capacity
- establish the right finance structure, which will be tax effective and maximise your flexibility and control.
Finding a great mortgage broker is a good place to start. A broker who specialises in property investment is likely to have professional connections who specialise in the same areas and can help. You don’t necessarily have to go out and find each expert yourself.
How do you make the right choice?
Given there are thousands of mortgage brokers, it can be overwhelming to narrow it down and choose the right one to be part of your dedicated team of experts. When choosing, keep in mind that a great mortgage broker should help you uncover your goals and priorities, and set you on a path that’s going to help you achieve those goals long-term. It is essential that you choose to work with a mortgage broker who will be committed to you for the long term and is focused on building the relationship rather than focusing on the short-term transaction.
If you meet with a broker and they start talking to you about interest rates and products before really understanding your long-term goals, they are not the right mortgage broker for you and should not be part of your Property Investment team of experts. It is a great idea to review testimonials/client reviews from other investors and ask the mortgage broker questions that will help you to make your decision.
Ask these question to determine if your mortgage broker is the right fit for your team:
- How they are going to be able to help you build your portfolio in the long term?
- How often will they review your portfolio and loan structure for you?
- What other value can they provide you outside of the finance process? For example:
- Do they offer property investment seminars?
- Will they help you grow your knowledge and skills in property investing?
- Do they provide ongoing education and support?
- Is there someone they can introduce you to that can help you on your journey?
- Can they offer you free property reports for properties you are considering purchasing?
- Can they offer you free bank valuations of your properties when requested?
- How much experience have they had with helping investors build their portfolios?
- What service and support will you receive after settlement?
- Do they normally like to cross-collateralise the loans and properties? – If the answer to this is yes then they may not be the right mortgage broker for you. Unfortunately, many mortgage brokers and banks will automatically cross-collateralise your portfolio. This may be ok in the short term but will limit your flexibility and options long-term impacting your best interests, so watch out for this.
One of the advantages of being a property investor is the tax deductions you are entitled to, and these tax deductions are essential for improving your cash flow and the financial performance of the property.
From an accounting perspective, there are two things you need to get right.
Firstly, you need to choose the right ownership structure to hold the property (and this decision needs to be made before you purchase the property) and secondly, you have to ensure that your ongoing tax structure is as effective as possible.
Making the wrong choices (especially regarding ownership structure) can be extremely expensive and difficult to change. It can result in you paying much more income tax and land tax than you should.
Over the years, I have seen many investors who did not want to spend money to get advice from a good accountant before purchasing a property. Worse yet, they did get advice but from the wrong accountant. Down the track, they usually realise that the ownership structure they have is not tax effective. It is not the right way to own the property, and does not support their goals and vision.
They may not be able to maximise their income tax offsets, and/or the ownership structure may actually be costing them more tax due to land tax. At this stage, they may decide they want to change the ownership, without realising it might translate into paying stamp duty and capital gains tax, which can be very expensive.
The right team can help avoid these costly mistakes, ensuring your journey is smooth and enjoyable.
A trusted Conveyancer/Lawyer
Your conveyancer will assist with the legal aspects relating to the purchase of each property. They can provide support by ensuring your purchase contracts reflect your understanding of what you are purchasing.
A Property Manager
A great property manager is essential, they will be responsible for looking after your interests as a landlord. They can provide guidance in tenant selection, rent collection, repairs and maintenance to protect your asset long-term.
A good property manager will regularly undertake market reviews so you are always optimising the rental income from your investment. Regular property inspections are also part of their responsibilities in supporting your journey.
They will also be able to assist you before you purchase a property by giving you accurate rental appraisals. With these you can forecast rental incomes, to establish any work required to increase rental return on your property.
A lot of people might think building a Property Investment team of experts costs a fortune. They see all these experts and they think, how am I going to pay all these people? They are probably going to charge me thousands of dollars in fees; how can I afford it?
A good mortgage broker doesn’t charge fees, and although some experts like accountants and conveyancers might, it is normally more expensive to not get the right advice.
It is impossible to be good at everything or know it all. If you try and do it all yourself, then you will make costly mistakes and learn the hard way.
Surround yourself with the right people so you can achieve your goals sooner. Avoid a lot of costly mistakes by ensuring you always receive the right advice.