How to get to that difficult second property investment

Did you know that there are just over 2 million property investors in Australia – but around 75 per cent only own one property?

The number of investors who own two is 19 per cent – and then it keeps reducing all the way down to one per cent of investors who own more than six properties.

So, as is borne out by these statistics, Australia isn’t a nation of greedy landlords who are sitting on a portfolio of dozens of properties.

In fact, it’s a country where most investors struggle to get past their first one.

Here are some of the reasons why.

1. The wrong knowledge

Because everyone lives in a dwelling of some description, everyone thinks that they know a bit about real estate and most believe investing in property is easy.  

Of course, as experts in property investment strategy, we know that it’s not.

The reason why so many investors stop at one is because they didn’t have the correct knowledge and education to start off with.

Perhaps they went off and bought the house next door or they were simply too “scared” to take on more debt.

Or they have “researched” the market so much by reading scary media headlines that they developed analysis paralysis.

Whatever the reason, most investors simply can’t buy their second property because they don’t know how.

2. The wrong property

One of the most common mistakes among novice investors is they buy the wrong property.

Sometimes they’re enticed by an agent, who is really working for the developer, and are soon signing a contract for an off-the-plan unit in an oversupplied suburb.

By the time it’s built, it’s not worth as much as the contract price and they’re lumped with a property millstone around their neck that’s not going up in value anytime soon.

Many beginning investors also opt to buy “what they know”.

Now that could be in their local area, their suburb or their street.

The problem with this “strategy” is that it’s not a strategy at all.

While you may be familiar with your local area – and like living there – that doesn’t mean that’s it an investment grade location.

In changing market conditions like in Sydney, it’s imperative that you consider other locations – including different States and Territories – to ensure that you’re buying a property that will grow in value sooner rather than later.

Then you can tap into its equity and buy a second property.

3. The wrong finance

Many novice investors go to their long-term bank for their first property loan.

They believe that because they have an existing relationship with them that it will be advantageous to them.

The thing is the banking sector has changed dramatically since our grandparents’ time.

There are many more lenders out there – and they’re hungry for your business.

Many investors get stuck with one investment property because they didn’t get the right financial advice at the outset.

Instead of working with an experienced broker, they simply ask their current bank for money and if they say “no” they give up.

A broker can help with your unique financial circumstances and property goals to ensure that if you want to expand your portfolio you have every financial chance of doing so.

The bottom line… 

More than two million Australians have at least one investment property, which means that they’re committed to improving their financial situation.

However, with the big drop-off in numbers owning two or more, it’s clear that many won’t achieve their property dreams.

The key is to start with the right knowledge, property, finance – and tap into expert help – to ensure that you’re one of the few and not one of the many.

WHAT CAN YOU DO TO STAY AHEAD?

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

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Why not get the independent team of property strategists and buyers’ agents at Metropole to help level the playing field for you?

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from Property UpdateProperty Update https://propertyupdate.com.au/syd-ai-how-to-get-to-that-difficult-second-property-investment/