- Know your stuff by learning about the sector
- Know your goals by determining what you want to achieve
- Know yourself by understanding your financial position
Every now and then, you’ll hear a story at a backyard barbeque or a dinner party about someone who’s struck it rich from real estate investment with little-to-no effort required.
They bought a house somewhere at the right time, sat back for a short period of time, sold during a market upswing, and made a small fortune.
They’ll boast about how simple it all was – so easy it should almost be a crime!
Sure, those situations exist, but they’re not common.
The ‘dabbler’ will likely lose
What’s more common is that someone with a bit of cash or equity in their home will rush into a property investment without the knowledge, guidance, and strategy to make an informed decision – and to spot red flags – and lose out.
Unfortunately, I’ve seen it time and time again – hopeful Aussies who work hard and have big dreams about their financial futures, and the freedom that wealth brings them and their families, being stung by poor choices.
A real estate dabbler will act on a whim, perhaps falsely inspired by the sheer good fortune of someone at a barbeque.
They will “have a crack” at the market and see what happens but a dabbler is very, very occasionally lucky, and almost always disappointed.
The investor is focused and clear
On the flipside, a real estate investor is educated, focused, clear in their vision, strategic in their actions, guided by experience, and constantly prepared to act in the best interests of their future.
That’s the investor mindset. Here’s how to get it for yourself.
If you want to be a real estate investor, get ready to become absolutely obsessed with every single element of property.
There are some fantastic books, blogs, magazines, newsletters, and podcasts available on the topic, from the basics to advanced strategies and principles.
Alas, there are quite a few sharks out there, too – and some can be hard to spot.
That’s why it’s important to make sure the voice you choose to listen to is providing independent expertise, not snake oil.
And, of course, you often get what you pay for, so consider enlisting the professional services of advisors throughout your property journey.
From finance brokers to buyer’s agents, specialists in the field can help you get the best deal, avoid harmful traps, and save yourself time and stress.
But all of the knowledge in the world is useless if you don’t know what you want to do with it, so you need to set some goals.
Set both short- and long-term goals that tell the story of where you want to be and when you want to get there.
Want to get off the hamster wheel and retire early? Want to build wealth that you can still enjoy while you’re relatively young? Would you rather have a healthy nest egg late in life, so you never have to fret about your finances?
Whatever you aim to achieve, there’s no single step that will get you there.
Usually, a combination of short-term goals will help us to accomplish a bigger, longer-term one.
For example, for a young person who aspired to build a property portfolio, their series of short-term goals could be paying down bad debt, slashing their spending, and increasing their disposable income to divert to savings to build a deposit to eventually achieve that bigger goal of buying their first property.
Meanwhile, an established couple with their own property may have short-term goals including a renovation to increase their equity and drawing on that kitty to buy an investment to work towards their long-term aim of having a multiple property portfolio.
Lay out a plan that’s based on your acquired knowledge, the guidance and advice of mentors, and the input of trusted experts.
The plan should be a well-thought-out roadmap to get you to where you want to ultimately be, via a series of steps that match your personal financial circumstances and appetite for risk.
With a strategy, you can begin taking control of your own destiny and make things happen for yourself, rather than waiting for them to happen to you.
Few things in life happen by accident. You can believe in fate – that’s OK – but I prefer to subscribe to the idea that being proactive and putting in the hard work is the way to achieve your goals.
I’m not talking about acting on a whim and I’m not talking about spontaneously jumping in head-first to whatever opportunity comes along – especially if you’ve heard about it from that one-trick-wonder bloke at the barbeque.
But I’m also not suggesting you overthink every single detail of your investment journey to the point where you’re frozen by fear, confusion, or uncertainty and never buy anything at all.
We call that analysis paralysis.
I’m talking about being thoroughly prepared and poised to act according to your strategy, so that when you do find an investment that ticks all the boxes, you’re ready to strike.
The Six Steps
With these six steps, you can get yourself there.
- Know your stuff. Are you obsessed about real estate and investing? Are you consuming all you can to learn as much as possible?
- Know your goals. Where do you want to go? When do you want to get there?
- Know yourself. What’s your financial position now? What is it in the future? What’s your appetite for risk?
- Know your team. Who’s your mentor? Have you got experts enlisted to help you on your journey?
- Know your strategy. What’s your plan to get from where you are now to the ultimate end goal?
- Know you’re ready. Got a plan? Got your ducks in a row? Got a great opportunity? It’s time to act.