How To Create An Investment Strategy That Doesn’t Rely On Your 9-5

The global pandemic has shown that any Australian can find themselves financially vulnerable, suddenly, despite their job title, sector they operate within or their status. So, how do we future proof ourselves, so we are not reliant on our 9-5 jobs?

Lloyd Edge, Director and Founder of Aus Property Professionals, accredited buyer’s agent and author of new book, Positively Geared says, “You might be in a position where you have experienced reduced hours, a redundancy, or your investments have been negatively impacted. Although confronting to move forward, we must re-think how we guarantee a stable income, and how this may feed into our investment strategy.”

He continues, “I started my investment journey as a school teacher on a low salary, and if I hadn’t of started investing in property, I wouldn’t be in a position to retire until I was 70 and even then I’d be close to broke. You might be in a similar situation. I firmly believe property investment is the best investment decision you can make in Australia, and that as little as $40K is a viable starting point for anyone.”

So, if you’d like to future proof yourself by considering property investment, here are some expert tips from Lloyd Edge. 

• Firstly, know your WHY. A vital first step is goal-setting, as you’ll need a vehicle that motivates you to stick to your investment strategy. To do this, you need to look at the bigger picture of what you’re trying to achieve, for example, is it financial freedom or would you like to take an international holiday every year? Once defined, you can work backwards to figure out how much money you’re going to need to get there and the different types of property acquisition strategies that will enable you to achieve these goals. 

• Determine your strategy: Know where, when and what to buy. This is a major hurdle as there is so much conflicting information about property investment. Depending on your strategy, the location, prices and property structures will greatly differ for each investment (it will also differ to your friends or family’s strategy, so make sure you stay in your own lane). During this process, it’s important to recognise the problem with the traditional method of investing in property – waiting for years for capital growth. You need to create a strategy where you can create equity in properties and cashflow to achieve your goals, rather than sinking all of your investment money into a single property that offers no substantial financial reward for many years.
• Hire a team of experts from diverse fields. Once you have a clear and precise strategy, convene a ‘dream team’ of experts. To successfully finance and complete such complex projects as purchasing and developing properties, and to meet the multitude of legal and practical requirements involved on time and within budget, you need to form a network of the following professionals: solicitors/conveyancers, mortgage brokers, financial planners, accountants, town planners, property valuers, building and pest inspectors, builders, architects, land surveyors and quantity surveyors and insurance reps.
• Improve your serviceability. A lot of people are under the impression that you need millions of dollars and a huge borrowing capacity to invest, but this is far from the truth. In saying that, securing a mortgage is not a simple thing, so how do you overcome the common obstacles? Firstly, ensure that you can show a stable income stream e.g. a full time job. Secondly, cancel all credit cards that you do not use, lower any credit card limits that you do not need, and cancel any lines of credit you’re not using. Thirdly, do a health check of your accounts and ensure you reduce expenditure on luxuries e.g. UberEats. Lastly, get a mortgage broker on board, as they can help you find the right lender for your circumstances. 
• Master the art of negotiating. Learning what can be negotiated in a contract of a sale can save you a significant amount of money. You can negotiate on the cooling-off period – relating to private treaty sales, the settlement period – the time between the exchange of contracts and the date when the new owner takes possession of the property and title, the deposit amount – it can be negotiated down to 5% instead of 10% and the fitting and fixtures – negotiate on items you might like to have included with the property. Just to name a few! 
• Aim for positive gearing and cashflow. If you want to build a sustainable portfolio, having a negatively geared portfolio and claiming the difference on tax is not a sound strategy, despite its popularity in Australia. Negative gearing will keep you in a job forever. Whereas, passive income from your portfolio will allow you the choices to step away from full time work if you choose, as well as being able to pay for all the other luxuries in life.