I suppose the hardest thing, when you have the information and aspirations to buy an investment property, would be what should an investor buy?

This is where the time spent setting your mindset up properly to know what you want and need to keep growing as an investor.

Number one is to have a plan on what you are going to buy with the end in mind.

Let me explain; if you were to go out and buy the next house you go and see and it is a nice property. Its very well renovated and seems to be good value. Do you buy it? If so, why? If not, why not?

The numbers are the answer. They need to be right for your plan. They need to show that you know what you are doing; that you are able to manage this property and future investments that will come along. You need to have some investment properties that have what we call positive cash-flow, and some that are negative cash-flow. If you buy something now that slows or kills your chance at the next property then you have really, literally, just wasted thousands of dollars!

The reason we have a negative and a positive is that we are after long term appreciation or capital growth. The growth will slowly gain momentum and after a few years the properties will all be paying for themselves, which is when you go and buy more property. You can go and buy more property because of the fact your portfolio can survive without you being around to cover the shortfall each month.

Having a plan to buy the positive cash-flow property first will stand up very well when you go for the 2nd and 3rd property finance. After you can show that these three can cover themselves your plan should move to getting a negative cash flow property that has a higher chance of appreciating over the next 18-24 month period. After your portfolio has gone through this time-frame you will most probably find that your positive cashflow houses are due for a refinance. Your negative cashflow house should also be refinanced to enable any capital growth equity to be put to better use.

You may find it better to sell your houses to enable you to move onto bigger returning property transactions. The “never sell” attitude is a plan that does not consider any dead equity (lazy money) and, quite frankly, you would sell shares that were not being leveraged to better than bank rates, wouldn’t you? The same goes for property and property investing.

In relation to goals, they should be SMART:

• Specific. What exactly do you want to achieve?
• Measurable. Something you can accurately measure, whether it has been achieved or not.
• Achievable. You can hardly set a goal to buy every Sydney Harbour residence, but you can be realistic to say 5 properties per year.
• Realistic. Your goal must be able to be be achieved without undue hardships or pressures.
• Timed. You need to have a deadline for your goals.

Property developers and builders usually write their goals around Christmas/New Year. Business people usually write them around Jun 30th each year. I write and amend mine all the time when it comes to buying something large or with a tonne of equity built in.

My goals consist of getting 4 properties a year to buy and hold, and as many as I can get with as little money in the transaction as possible.

I am looking at doing a renovation in the coming months, so you can see my goals are open to change and react to what I find, can afford, and have time to do.

Plan your life and have goals you want to achieve. Write them down or you will be like everyone else when they say(and I hate it everytime people say this), ‘Oh its July, hasn’t the year gone fast’!

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