Real estate

What does $190 million get you?

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Even one of the biggest lotto wins would still probably only get you a healthy deposit on this amazing property which is currently taking first place as the most expensive house for sale in the Unites States. Situated on 50 acres in Greenwich, Connecticut, I’m sure you’d have no issues figuring out what to do with the 12 bedrooms and 7 bathrooms. Alternatively you could pop out to the pool house for a dip in the pool or spa. Considering it’s been in the same family since 1904 it’s sure to get a lot of interest so get to the bank quickly to have your finance approved…see you at the open house! Click the picture below to check out the listing

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Tip 2 – Become a Student!

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learnOne of the things that you will find when you start investigating property investment is that there is a huge amount of information out there for you to digest. A lot of it is good and it’s great to know that there really are people willing to share their own knowledge to help you learn, alternatively there are also people willing to put out information that can unfortunately be misleading or are trying to make a quick dollar from the uninformed. The only way to know what to do is to learn it and frustratingly this takes patience. I’m a big believer that property investment is a journey and that it takes time, a lot of time. If you’re expecting to make big money quickly through buying and selling property for a profit then you’re heading more along the lines of property speculating rather than property investing. Some people may argue with me and that’s OK, I certainly won’t disagree that some people have made their fortunes out of speculating, but it’s not what this blog is about. This blog is about discussing the elements that you need to invest for the long term and to set yourself up for a prosperous future. The first step for most of us will be to accept that to do it we’ll need to ‘become a student’ again and go back to the books.

When I started out thinking about buying a property for investment I can freely admit that I knew absolutely nothing about what to do or how to go about it. Years later I’d like to think that I know a whole lot more and that this knowledge has put me in a much better position to manage and continue to improve my portfolio. That being said I’ve also come to understand that I will never know it all nor should I expect to. The property investor that thinks they know everything that there is to know is entering dangerous territory. So I guess you could say that the first lesson I learnt is that to do it well I needed to learn how to do it. If you are starting the journey then you’ll also need to figure out how to learn more about the ins and outs of investing. Being well informed is the best tool that you can have when starting out and you need to commit to developing this knowledge. As they say – A fool and his money are soon parted – becoming informed will make property investing an enjoyable and much less stressful pursuit and will hopefully help you avoid becoming the proverbial ‘fool’.

Once you start on your path to learning all about it you’ll quickly realise that there are huge amount of resources out there to digest and that it can be confusing. You’ll come across books, magazines, websites, blogs, conferences, seminars, clubs and organisations just to name a few. One of the ways I tend to approach all of this information is to sift it out by asking myself “What’s in it for the person giving me this advice?”. I started off by reading books, lots of books. Whilst some of the information was confusing and contradictory, I felt that for the most part, all the author of the book had to gain was the money from me buying the book. On the other hand, it takes a lot to get me to sign up for a seminar being run by a business spruiking the wonders of property investing. yes I’m cynical but I think a healthy dose of it in investing is a good thing. Also realise that you’ll be learning a new language. It took me a long time to start to understand the words and phrases used in property and I’m still learning. Try not to be put off by this however, it comes with time.

So if you’re just starting out, start out by becoming informed. Commit yourself to learning as much as you can and you’ll be giving yourself a great footing for a rewarding journey in property investing. If you are not willing to put in the time to learn about the ‘how to’ then I’d suggest that you might consider something else, as I’m sure that for every successful and well informed investor there are as many, if not more, that went into things uninformed and have come off second best. One useful place to start is to investigate the resources page where I’ll highlight some of the things that helped me start my journey. Whilst I found many of them useful you may not, keep looking and you’ll be sure to find the information that works for you.

A word about rental guarantees

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dt_off-the-plan_729-20121026154649765420-620x349There is an interesting article featured in The Age today looking at the potential pitfalls of rental guarantees for apartments purchased off the plan. Click here for the article. Melbourne has been in a boom time when it comes to the construction of new apartments (just look at Docklands over the last 10 years) and the article highlights that there are 25000 new units coming on the market in Melbourne in the next 12 months. What it importantly points out though is what can potentially happen to investors that purchase with a rental guarantee which is above the going market rent for the area and then the guarantee period expires leaving the investor with sometimes an enormous gap between their income and expenses.

It’s these sorts of ‘incentives’ that investors need to be aware of. OK, they may work in your favor if the time and the place is right but it’s important to ask yourself the question ‘why is this being offered?’. Always follow the dollar! (Some useful advice I was given years ago and it hasn’t failed me yet!). Interestingly the author highlights that people may find themselves ending up buying a financial product rather than a piece of real estate. Check it out and make up your own mind here.

Celebrity stalking

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You’ll have to forgive me for being all a bit L.A. focused for a while with an imminent trip to the states on the horizon. I do love a bit of celebrity stalking so why not combine that with my passion for all thing bricks and mortar and do some celebrity home spotting!back-of-house-dusk

I’ve started early, and long before I need to pack my bags, by having a look what might be around. The first I’ve spotted on the market is the former home of Kirk Douglas currently on the market for $17 million. Whilst I go and dust off the checkbook click on the image to have a better look at what you could get for your money! It’s being listed by Hilton and Hyland real estate brokers in Beverly Hills (yes, the Hilton’s are related although you won’t see Paris putting out the open for inspection sign). Have a look through their website if you want to see some amazing homes!

Tip 1 – Speak to people!

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speaking

One of the reasons that I started this blog is because a lot of people have approached me over the years to talk about getting started in property investing. How do I do it? What steps do I take? Where on earth do I begin? When I purchased my first investment at the ripe old age of 23 I can’t recall anyone that I knew who was investing in property. I look back now and realise that I made my first purchase without really having any knowledge about real estate and certainly not about how to go about investing in it. I knew that I wanted to do it and had some idea in my mind about what I wanted the end product to be but no idea about the other 99% of things that went into getting to that point. What I have come to realise now though is that when you are thinking about starting out there are two key elements that you cannot get anywhere without – Information and Motivation.

Information is essential throughout the entire process of investing in property but particularly as you are starting out. The right information can set you out on an exciting path into the world of buying your own property and becoming a successful landlord and investor. Connecting with the right people, particularly those that have already done it (and done it well) can save you immeasurable time in learning how to get started. You will hear me talk in future posts about the benefits of learning through experience, I’ve done this and absolutely believe in the benefits of it…however…property can involve big bucks and it’s a major commitment for you, so why not learn from other’s experiences (and their mistakes). The other realisation I’ve had is that the people that have done it well also like to share their experience and knowledge with others. They are keen to talk about what works and share their knowledge about success with others. This valuable resource is also generally a person who is also humble enough to share their mistakes which is often the most valuable information you can get. Beware the advisor who doesn’t admit to ever making a mistake!

Motivation is the other critical factor to becoming successful when starting the journey as a property investor. I know it sounds incredibly simple but you have to want to do it. I would imagine that many investors would agree with me that the biggest hindrance to getting started (and becoming successful in the future) is developing and maintaining the motivation to actually do it. I refer to property investing as a journey for a very good reason, it simply does not happen overnight. It takes time, energy and commitment to get the process started and it requires you to maintain all of those traits to ensure that you do it well. So many of the people that I have spoken to have said how interested they are in investing in property but only a limited amount of them have gone ahead and done it. I’m hoping that it wasn’t the discussion they had with me that put them off (I’m always very passionate talking property investing) and I’m fairly sure it wasn’t. I’d confidently say that it usually comes back to motivation. As with all successful people, they know that it’s not always smooth sailing and that you actually need to put something in to a plan to get something good out of it. We live in a society where so much of our day-to-day life is instant, whether it’s instant information, instant rewards or instant coffee. If you want instant outcomes, then I’d suggest you think carefully about property investing. If you are motivated and prepared to start a journey to get to your goal knowing there will be a few ‘bumps in the road’ then read on!

A word from the wise – Whilst speaking with others is a great way to get useful information and also to develop and sustain motivation, it can also work against you if you are not careful. In my experience, for every supportive person that I spoke to when I was starting out there were another 10 that vigorously warned me about the pitfalls of investing and supported their concern largely with incorrect information. Don’t completely ignore advice (even if it seems negative) but also make sure that you check out the information for yourself. Whilst detractors can bring you down, supporters raise you up so make the most of them. I’ll talk more about this in some of the later tips.