I believe you must engage a Buyers Agent with every property purchase, Using a Buyers Agents/Buyers Advocate and Property Advisor is key to more property investment success. These are extracts from my latest book “The Australia Property Investment Handbook 2018-2019”. In all good book stores now. Also Read Property Finance Made Simple and Property Investing Made Simple.
Risk appetite and profile:
Investing involves risk. Risk is the chance that an investment will not give you the returns you hoped for. You could lose money or not make any money. All investments have risk, but some have more than others.
Generally, investments that are expected to pay higher returns involve more risk. These investments are likely to produce higher returns over time than more conservative investments. Over short periods of time investments can fall in value. Property is a long-term, not short-term investment, unless you plan to develop or renovate the property. With a buy and hold strategy, it’s certainly a long-term strategy.
Your risk profile when determining a property plan is not designed to determine if you should invest in property or another asset, it’s used to determine the strategy within the scope of property investment. Each type of strategy, location and property has its own risks and benefits. Your risk profile can be used to assist with trying to choose a strategy and property more suited to you.
If you want a positive cash flow property this tends to suit lower risk appetites, preferring not to take the risk of being too negatively geared or the risk of waiting 10-15 years for an increase in value. Perhaps your health or job security is such that you prefer not to be out of pocket too much. Capital growth strategies require a slightly higher risk appetite as you have to wait for the growth, whilst earning less from the property.
Some people may be more aggressive or assertive in how they wish to move forward, sometimes from desperation, or out of sheer necessity. However, a plan forward needs to be justified and responsible, managing your expectations, and avoiding becoming a slave to your debt. Sometimes a risk appetite does not correlate to a risk profile. For example, a couple who has more than 2-3 credit cards are a higher-risk profile, but may have a very low risk appetite.
Some ‘would be’ property investors have a higher risk appetite than what they should have for their circumstances. This can end up putting them in a precarious situation, being exposed to too much debt, and an untenable future cost of debt.
Needs will vary depending on experience, knowledge and risk profile. Less experienced buyers generally want someone to manage the process for them, and help them find a property.
Rule: Always have a SMART goal. It must be specific, measurable, attainable, relevant to you and focused on a fixed point in time.
To fill in a readiness to invest questionnaire, please go to australianpropertyadvisorygroup/resources
In Summary: Your age, income, borrowing capacity, living expenses, surplus money and risk profile will all have a bearing on the plan, and the reality and likelihood of the outcome (viability of your goal). Compromises may need to be made.
No two people will have the same strategy – it may be similar, but not the same. Your future is in your hands and you need to own it. Be responsible for it so that you can enjoy your future, just as you intended or hoped it to be.