The habits of an effective property buyer

It's undeniable that property enthusiasts, be us home owners, investors, developers or otherwise, look at the world a little differently. There are many skills involved in investing successfully, and it largely takes a team behind you as well.

Some property buyers are, however, more effective than others. Here we delve into which habits are worth acquiring, and ask you which you think is the best for budding investors to focus on. 

Look for solutions

Where an inexperienced buyer will see a grotesque property, a savvy investor will usually see a renovation opportunity and a chance to buy under market value as emotionally-attached home buyers steer clear.

Similarly, an investor will look at areas that many deem "problem" areas and see if they're set to undergo gentrification or significant changes that may make then a prospect down the track.

The best investors know that where other buyers are turned off, there may just be an opportunity lurking and that sometimes it's worth Looking beyond face value.

Understand the numbers

We hear the phrase 'run the numbers' a lot, particularly when it comes to doing your due diligence. But the truth is that the best investors truly understand what the numbers mean. This may just be knuckling down into what a rental yield really is, and what effects it, but can go as far as creating your own spreadsheets within which to plot the potential property's statistics.

Those whose investments and properties do well know which numbers, costs, fees and statistics to ask for, and they know what a good investment looks like for their portfolio.

Prepare for the worst

It's great to want your property to do well, but there's no point in leaving yourself under protected and blind to what could potentially occur.

Those who manage to get up again after being knocked down on the property circuit are those who continually think about their defences.

This comes in many different forms, from the structure of your investments from an accounting perspective, to insurances and your own personal situation. What happens if it turns out your property has negative equity? How can you survive if you lose your job and your property suffers bushfire damage?

Hopefully these situations will never happen, but you need to be thinking about it just in case they do arise.

Consider the end game

There is a habit to love the "here and now" for investing, that is the suburbs that are hotspots currently and a fascination with the sudden rental fluctuations. However, the majority of investors are in it for the long-haul, even if their strategies are active ones, such as developing or renovating for a quick profit.

With this in mind, good investors are continually considering where they want to be, and whether the deals they are looking at help contribute to this overall goal.

Knowing what your situation is going to be at the end of the investment journey will not only help you get to that point, but will allow you to think of situations you might otherwise have ignored. For instance, are you buying a one-bedroom unit in an area that in ten years will be dominated by families, or vice versa? You need to know what an investment will look like down the track.

Leverage advice

Good investors know that there are other fantastic individuals out there to network with. Whether they are from forums, industry professionals or keen investors themselves, there's a wealth of brains out there who are often happy to help.

Some of these sources of advice may come with a price tag attached (and here understanding your numbers and the dollar value worth of advice will come in handy again) but so often there's freely available information that assists most investors get off to a good start.

It's worth just asking someone you look up to for a coffee, or a chat, and tell them your situation and concerns. Keep your ears open, network and continually learn from other peoples' experiences. It's also worth finding out what their mistakes have been in the past - if they have already made them then there's no reason you should too.

Here at Property Observer, for instance, we have data pages, updates, news and opinion pieces that may be of some help. There are a number of other sites, calculators and spreadsheets also online that you'll want to get your hands on.

Continually review and refine

Reviewing your portfolio, life situation and financials is a constant factor of good property investing. This can be formal - sitting down with a notebook, spreadsheet and calculator - or an informal reflection. Either way, there's little chance of reaching your goal if you don't keep an eye on your plan and how you're tracking.

This may be every time something significant happens in your life. These may be weddings, job changes, new cars, children, or similar that property accountant Shukri Barbara from Property Tax Specialists refers to as life's "pressure points" (where he says you should also be heading to your accountant's office!) but it could also just be when you change your mind about what you want in your future.

Constant reviews will also help you ensure that you are prepared for your end game, for the worst case situation and that your numbers are still where you thought they would be when you purchased.

poll-results-oct-21

 

 


As part of our new series about choosing the right first time investment, we will delve into some of these points over the next few weeks. Next week, via reader request, we will be presenting you a piece on assessing capital growth potential.

 

poll-results-oct-18

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?