5 Things to Know When Setting Property Investment Goals
“Fail to plan and you plan to fail.” – You’ve probably heard this old adage a few times, and for good reason! Whilst our plans don’t always come to fruition exactly the way we want, they do provide some guide as we journey through life.
Our plans should be based on our goals and objectives – What do you want to accomplish? Where do you want to be in five, ten, twenty years time?
Establishing solid, attainable goals as a property investor is what sets apart those who succeed from those who dabble and end up derailed because they’ve no idea how to get to their destination.
When it comes to property investment, the most common overarching aims are concepts like wealth, financial freedom and the ability to determine the lifestyle one can have upon retirement.
The problem with such general goals however, is that they’re not really measurable. In order to adequately prepare yourself for the property investment journey, you must first formulate specific outcomes that help you track and monitor progress, as you implement your own detailed investment roadmap.
After all, this is a significant financial commitment and one that could be life changing – for better or worse. So here are 5 things you need to know when establishing your property investment goals.
1. You – The Investor
Most people believe if you fail to create wealth with real estate, it’s due to poor asset selection or some other judgment error. The fact is – your psychology around money and success is actually the main determiner of whether you achieve your investment goals.
Think about how you relate to money as an investor, then establish your investment comfort zone. Are you a risk-taker? Or do you prefer the solidity of a reliable, proven investment that eliminates stress and amplifies income?
Some assets are more secure than others, even within the same sector like property. Always invest according to your personal risk profile, because you are destined to fail if you fear the journey before it even begins.
This also means understanding what you want from life with regards to money and lifestyle, so next you’ll need to establish…
2. Your Financial Goals
These must be tangible and achievable. Resist the temptation to self-sabotage by creating outcomes that are impossible to attain – this is one way investors convince themselves that property is just not for them and that they’ll never succeed at it.
Allocate timeframes to your goals, and rewards for when you reach them. Perhaps when your portfolio is generating a steady income of $70,000 per annum in ten years’ time, you’ll quit your job and pursue that passion for painting, or travel somewhere new each year.
Your financial goals should also account for how and when you pay down any debt attached to your investment portfolio, and the type of loan structure you put in place to service that debt. Ultimately, these goals will largely be determined by who you are as an investor, and this also means having a good understanding of…
3. Your Own Strengths and Weaknesses
An important aspect of establishing your investment goals is knowing what you can and can’t manage by yourself. If you’re determined to reach a certain financial status as you climb the property ladder within X number of years, what skills and knowledge are you bringing to the table to accomplish that goal?
This will largely determine how long it takes you to reach your desired objectives, and what type of assistance you’ll have to seek out along the way. Just like your risk profile, it’ll also help establish the investment path you take.
If the discipline of budgeting and finding extra cash for a negatively-geared property portfolio is something you simply don’t have, for instance, or you’re not particularly great at handling the uncertainty of an inconsistent cashflow, consider a more secure, income-producing investment property.
In any case, it’s all about understanding and appreciating…
4. Your Limits
As mentioned previously, there’s no point establishing unrealistic goals that will lead you down the path to failure. If you can’t afford it on paper, then chances are – you just can’t afford it. And that’s how the banks see it too.
Your goals must reflect the resources you have at hand when you first start ascending the property ladder to financial freedom, and it’s as simple as that. Within those fiscal boundaries, you must then determine…
5. Your Priorities
So you know:
- Who you are as an investor,
- What level of financial commitment you can realistically make to start, or add to, your investment portfolio, and
- Your risk profile and personal limitations with regard to your own strengths and weaknesses.
Now it’s time to think about, well, time. How much of a personal investment are you prepared to make to reach your goals within the ideal timeframe? If you have a young family, you might want to reduce the hours and days spent on searching out potential investments and managing your portfolio to a bare minimum.
On the other hand, if property is your passion and you want to be proactive in building your portfolio, your goals should reflect this. Again, it depends on your priorities at whatever stage of life you are currently in.
Those nearing retirement or with young families may prefer the security of solid income and manageable cashflow, compared to high growth, low yielding property investments.
Essentially, it all comes down to this simple analogy: You wouldn’t start driving without some idea as to the end destination, and you’d never set off for an unknown destination without first mapping your route. Applying this same logic to your investment journey will reduce your risk of crashing and burning, and increase your chance of arriving safely and successfully.
How Quest Properties Can Help
Did you know that the sale of Quest apartments as secure investments has been ongoing since Quest commenced in the late 1980s with our first development in Fitzroy, Melbourne?
We now have over 5,000 strata titled apartments owned by private investors who enjoy exceptional returns from a product that’s second to none when it comes to long-term security and enviable cashflow benefits.
Quest Properties’ strength lies in our loyalty to you – the investor – and our dedication to walking you safely through the process of acquiring the perfect asset to complement and sustain your property portfolio into the future, whatever your investment strategy and objectives might be.
To find out more about our approach to property investment, please call us on 1800 697 837 or register with us today.