Oct 22, 2017
Working in real estate, I see a lot of young adults like myself, keen to start an Investment Portfolio who aren’t sure where to start and as a consequence, they hold back! Conversely, I also see some who charge right in, with no knowledge whatsoever who pretty much just cross their fingers and hope for the best.
Over the years I’ve made some really great, sound financial decision. I’ve also made some not so great ones and these are the ones I’ve learnt the most from.
To help you on your path to building an Investment Portfolio, I’ve created a few straightforward tips based solely on my own personal experience. Please always consult a Financial Adviser, and note that the tips below are only my experience.
1. Create Equity
Pay off your first loan and any bad debts as quickly as possible. Bad debts negatively affect your service ability, meaning a lower amount you can borrow.
What are bad debts? Typically young adults accumulate multiple small debts and loans (things like cars, computers, jet ski’s, motorbikes & credit cards) as they only look at the short term and monthly payments. However, often these small amounts all add up to be quite a chunk of the persons income.
2. Use Your Equity
Once you’ve paid some money off your loan, you can use that as equity, potentially for a deposit on another property. That way, you don’t need to outlay any cash (aside from general purchase fees and solicitor fees). Banks may view your equity in the same way they would view savings.
3. Positive Cash Flow Investments
When you’re buying an investment property, seek out those properties where the rent paid will cover the mortgage, rates and relevant insurances. That way your out of pocket expenses will be mainly things like maintenance and repairs – and generally speaking, these should be tax-deductible.
4. Don’t Wait! Make a move!
Once you’ve accumulated enough equity – do it! Consult with your financial adviser and with them on board, make the move and purchase another property.
5. Other Loans
If you need to make large purchases such as a new car, borrowing against your property may result in a better interest rate.
The number one thing I hope you take away from this article is this…
Keep in mind that these tips are from my own personal experience. Things I’ve learnt along the way that I hope can help you out too. Always speak to a financial adviser or your bank before going ahead with a large purchase or paying off a loan out of schedule. They will advise you on best decision for you, taking into account your personal circumstances.
- Jeremy Karlovsky (Sales Consultant)