So you’ve decided you want to be the owner of many properties. But how do you actually become a property investor?
The good new is that you don’t need a university degree to excel in property investing. I don’t have a property degree but still managed to buy four properties by the time I was 30.
Learning how to build and manage your own property portfolio is a skill anyone with ambition can learn to do.
How to become a property investor
Below is part one of a two-part blog post, which lists what you need to do to become a property investor.
1. Educate yourself about the property market
Many people only dream of owning two properties: their home and one other investment property.
These buyers will keep researching the property market until both properties are purchased. Thereafter, they stop researching because their goal has been achieved.
Contrarily, to become a property investor, you need to research the property market all the time, even if you are not ready to buy now.
And unlike university or college, no one will be there to teach you unless you take the initiate to educate yourself.
This means you need to regularly find resources which will keep you informed about the changing economy, housing policies, tax reforms, regulations, population shifts, town funding, employment market, in addition to the local and national property markets.
2. Don’t be afraid of debt
Unless you are a cash buyer, your mortgage debt will grow larger and larger with every new property you acquire. Fact.
Personal debt can be a scary thing to most people, myself included. But I see property investment debts as a business debt. This means you are investing money to create a long-term profitable system.
This system is based on: buying a property; earning rental income from your tenant; and, when the value of this property increases, releasing equity to make your next property purchase.
You continue this system until, one day, you sell most of your properties so you can retire earlier.
Thus, you should not fear mortgage debt. You should use this debt to grow your assets. But remember, always manage your cash flow to avoid defaulting on your mortgage repayments.
3. Don’t wait for the property bubble to burst
Many new home buyers and investors are always waiting for the property bubble to burst.
Though it’s important to be aware of what is being reported, you need to invest whenever you are ready. Don’t let the property bubble be an excuse for delaying your plans.
Commentary on the property bubble is based on some economic forecasting and a lot of speculation.
When you wait for an ‘expert’ to dictate the right time to buy, property prices might have increased because the general public has been informed of this new ‘hotspot’.
Know that, in most cases, the value of a property will increase if you own it for a decade or two. This is not rocket science.
4. Identify property hotspots before everyone else
Areas which have the strongest property growth potential are the ones where the general public and the media are not aware of … yet.
To find new growth areas, uncover which towns have approved government funding for regeneration, and where new transportation routes (in particularly train lines) are being built. Politicians and councillors have the most insights on these topics so follow them on social media.
Also identify towns where the younger middle-class have been out-priced from the local property market. Where is this younger middle-class moving to next to purchase their first home?
When the middle-class moves to a poorer town, the disposable income of this area increases, allowing for the local business economy and property market to grow. Read my post on how to find property hotspots
Sign up for next week’s second post on how to become a property investor.
So, what’s the most difficult part of trying to become a property investor?