Have you ever considered how real estate can fast-track your early retirement? Or have you ever wondered how you could become financially free within the next 15 years?
We know getting started in real estate can be daunting and overwhelming. There are savings required for your first deposit and uncertainties around interest rates, not to mention the many types of properties you could potentially purchase – established homes, townhouses, off-the-plan apartments etc.
We recently met with local financer planner and owner of WealthFit Money Management, Justin Daniel, to discuss how you can future proof your life with real estate. In particular, Justin provided an overview of how he helps clients on their journey to becoming financially free.
Setting goals and defining a budget
With any investment journey, it’s important to determine your goals and objectives early on. Think these through carefully. Do you want to retire by 45 or 55 years old? Do you want to achieve $100,000 or $150,000 in passive income per year? Justin and his team will assess your needs, goals and objectives to help determine your ‘why’.
It’s also critically important to determine a budget for your household. While budgets may not sound exciting, they are powerful in understanding what surplus income you have to invest with. Whether your household income is $120,000, or $180,000, it’s important to know how much surplus income you have to invest with at the end of each month. Is it $500 or $2,000? As this will make a significant difference.
Make sure you consider all expenses that are incurred in your household throughout the year including food, clothing, transport, utilities, rates, insurances, school fees and entertainment.
Justin recommends clients review the Australian Government’s Moneysmart website – https://moneysmart.gov.au – with this being an excellent resource in helping you create and manage a household budget.
Educate yourself and work with local professionals
Once you understand your household budget and what surplus income you can invest with, it’s time to meet with local experienced professionals to help implement your strategy. From a property context, this will include an experienced mortgage broker and real estate agent.
A mortgage broker will help you identify your borrowing capacity and find you the best home loan options for your situation. A real estate agent will help you identify listings and properties that meet your needs and requirements. During this time, ensure that you comprehensively educate yourself.
For example, if you are looking for a property in a certain region, ensure you know the most desirable streets and pockets; including those streets that are not desirable. Furthermore, a good real estate agent will take you through the benefits and drawbacks of buying new or off-the-plan, versus buying established homes.
Long-term approach and protecting your asset
To succeed in property investment, it’s important to understand the key fundamentals and that real estate is not a short-term game; nor is it quick. It’s a long-term game with at times, significant monthly holding costs. In order to see a positive return, you need to be comfortable with holding property for 10-20+ years.
Once you embark on investing in real estate, you need to ensure you are well protected. It is important to consider landlord insurance, life insurance and income protection insurance as part of your investment journey. Ensure the policies you select cater for your specific requirements. If you need any assistance with this, contact Justin who will be happy to discuss with you.
Next steps
Investing in real estate is exciting and can significantly transform your life. Now is a great time to get started on your property journey, or continue climbing the property ladder, as interest rates are at an all time low. We are also seeing quality stock continually come onto the market. To learn more about the benefits of real estate investing, speak with Mark who can help provide advice and steer your journey in the right direction.
