Six essential steps for investing in property with success: Housenet's Darren Moffat

Darren Moffatt, founder and chief executive of Housenet.com.au, is a property and social media enthusiast. He has prepared six steps to successfully invest in property.

So you want to build a real estate empire. Nice, ambition is good. But how to property invest and where to start?

There’s a mountain of information out there on the web about buying investment property. It’s one area where too much information can actually hinder rather than help. For first time investors in particular, it can be bewildering.  So we set ourselves a challenge: what are the bare minimum steps anyone needs for successful property investing?

This post is designed to both help first time investors and spark a discussion among seasoned pros: what are the absolute, essential property investing steps required for success?

I got it down to six, but maybe you can do better and distill it even further. Is this the definitive list? Leave a comment and have your say. OK here goes …

1. Assess your readiness.

Are you ready to invest in property? Are you earning enough income, and do you have enough cash or equity in your existing home to fund the purchase of property? Establishing your borrowing capacity is a good first step. Even if the answer is yes, you may still not be ready to invest. You should also consider other lifestyle questions such as your job security, family circumstances, and current debt load. Just because someone says you CAN do it, doesn’t mean you should.

2. Decide your objective.

Why do you want to buy an investment property anyway? Lots of people don’t actually know, they’ve just heard it’s an easy way to build wealth. Well guess what? It’s not as easy as it used to be. You need to be clear about what you’re trying to achieve. Here’s a list of common objectives investors have when buying a property:

• Capital growth (potential increases in the capital value of the property over time)
• Rental yield (the rental return expressed as a percentage of the property value)
• Tax minimisation (reducing personal tax via negative gearing in property)
• Investment diversification (investing in different markets or asset classes)

Which one applies to you? Maybe it’s a combination, but successful investors normally have one clear objective/vision for each purchase. These blogs might help, and you may need to get professional advice at this point to work this out.

3. Research, learn & network.

It’s important to do your homework and understand how property investing works. There are some excellent sites out there like Kevin Turner’s Real Estate Talk and Michael Yardney’s Property Update that will give you plenty of resources to learn from.

There are also property forums and niche social networking sites like Housenet where you can rub shoulders with professional investors and real estate experts. As in life, who you know is just as important as what you know, when learning property investing.  Housenet has many elite investors & property advisers like Chris Gray, Ben Kingsley, Michael Sloan & Jane Slack-Smith who you can approach online.

4. Build your team of advisers.

Don’t walk alone. Investment property can get complex pretty fast, and almost always involves tax, financial planning, mortgage finance, and insurance elements.  Therefore, once you feel you’ve done enough research, start building a team of trusted advisers. These might include:

• Accountant
• Mortgage broker
• Buyer’s agent
• Solicitor/conveyancer
• Financial planner

You can find plenty of good people in this property industry directory.

5. Set criteria, search real estate & buy the property.

The final step for successful property investing is to set a firm criteria for your purchase. Be clear about where to buy, what price range, what type of property, brand new or pre-existing etc. This criteria should meet the objective you set in step 2. Scatterguns don’t work well in property.

Most people still use the big portals like RealEstate.com.au & Domain.com.au to search, but increasingly there are sites that ‘aggregate’ their listings in one place and offer extra useful data on each listing. At Housenet, we partnered with Ripehouse to bring our members incredible FREE data on properties for sale.

When you join Housenet, you can see how long each property has been on the market, when and how often the asking price has changed, and even price discounting.

6. Find a tenant!

You’re not really a  landlord until you have a tenant, but where to find one? Most investors use a real estate agent to manage their property, and you can find plenty of agents HERE.

If you want to give it a go yourself, you’ll need to advertise for a tenant. You can do this on sites like Gumtree, Rent.com.au or place a a free listing in the Housenet classifieds. Don’t forget to check their references, and good luck with your landlord dreams!