More than 50% of first-time property investors are overlooking a crucial step when starting their property portfolio. Our Managing Director, Damian Collins, discusses what this step is, and why it’s so crucial to property investment success.
Property has an exceptional track record for delivering strong capital growth over the long term backed by regular rental income and valuable tax breaks. Unsurprisingly, our 2022 Property Sentiment Survey showed that one in four respondents planned to buy an investment property this year alone.
However, our survey insights also revealed a critical step that many first-time investors are overlooking when starting their property investment portfolio.
One in two beginner investors failing to plan
Our survey found that one in two (52%) first-time property investors are entering the market without a formal plan in place to guide their investment decisions.
Our Managing Director, Damian Collins, says it’s a concerning finding given the importance of the early stages in the property journey.
“A lot of investors will use the equity growth from their first property to expand their asset base in future, so the fact that so many aren’t getting advice on the right properties to target is concerning,” he said.
Damian adds that investors entering the market without a plan are at a greater risk of making poor investment decisions.
“Without a clear idea of what you’re looking to achieve and how you’re going to achieve it, you run the risk of purchasing a property that doesn’t align with your long-term objectives, or worse still – one that might hold you back financially in the future.”
“This is something we see far too often when investors approach us for their second purchase, and it often means putting progress on hold while we get their portfolio back on track,” he said.
What goes into a property plan?
So, the value in having a plan is clear, but what does it actually involve?
Damian says that a property plan should be tailored around three key factors.
“Your financial situation, your short and long-term property goals, and your feeling towards risk should all be considered when you’re developing a property plan.”
“Once you and your property advisor understand these factors, that’s when you can start to consider the types and styles of properties that support these elements, as well as the specific steps you need to take to progress with your portfolio” he said.
Damian adds, “Every investor is different, so the crucial point is that your property plan should be tailored to you, and reflect your unique needs as a property investor.”
80%+ experienced investors follow a plan
But how much value can a property plan actually deliver?
The telling difference lies in the insights we gained from our experienced investor respondents.
Our Survey found that among respondents with two or more properties, 80% are working to a blueprint of some form.
What’s more, across those investors with a portfolio spanning 5-plus properties, close to nine out of ten (86%) said they were guided by a property investment plan.
Damian observes, “The high proportion of experienced investors who have a plan in place is testimony to the value of having a blueprint to follow as part of a long-term investment strategy.”
“As our research shows, it can be the difference between owning one rental property and amassing significant wealth through a portfolio of well-selected properties,” he concluded.
Momentum Wealth is one of Perth’s most trusted real estate investment companies. Our goal is to ensure you receive reliable, tailored support throughout every stage of your investment journey.