Investment Property: 7 Critical Questions To Consider Before Building A Property Portfolio

To be a successful property investor, there are many things you need to consider

. Ideally, these questions should be researched and answered before you start on your property-investing journey. As we have found, it can be expensive to later find out you should have bought a property in a different structure, or have committed to the wrong type of loan for your investment strategy.

1. Have you got an asset protection plan?

You have worked hard to build a property investment portfolio. You do not want to risk losing your assets due to litigation.

2. Do you have personal financial statements to monitor the performance of your investments against your goals?

Most businesses have a Balance Sheet and Cashflow Statement. Businesses know the importance of knowing both the current financial state and financial performance of a business. If financial statements are important to a business, they are also important for you personally. After all, you are a business. You have a primary aim; you have goals or targets. You need to know the current financial state and performance of yourself in relation to achieving your primary aim.

3. Is your primary investment purpose to create wealth or cash flow?

This is a very important question to ask very early in your property investment career. Typically, the type of property with the potential to generate wealth is different to the type of property with the potential to generate cashflow. Some properties will work for both strategies, however you must be clear whether your intention is to create wealth or cashflow and be able to identify the right type of property for your strategy.

4. Do you have the right finance model set up?

If you are a buy and hold investor aiming to hold a portfolio of a number of properties over the long-term, you need to ensure you have the right finance structure set up. Without the right finance structure, you may find lenders unwilling to lend you more money, and this will restrict your ability to purchase an additional property.

5. Do you have access to professional tax advice?

Getting the right advice can sometimes mean the difference between a property that may be costing you money, to one that generates you positive cash-flow. The right knowledge and advice will ensure you are maximising your tax deductions.

6. Do you have the ability to manage your personal cash-flow?

Good money management skills are critical to a successful long-term property investor. They are a foundation skill required to achieve financial independence. Your money management skills could mean the difference between the ability to hold your property portfolio or sell a property.

7. Have you selected a property investment strategy that is repeatable?

Find a strategy that works for you. One that works for you is one that you enjoy, have the time to commit to, have sufficient experience and knowledge and have contacts in the industry to assist, where necessary.

Property investing is a long-term strategy, so you need to select a strategy that you can commit to for the long-term. A repeatable long-term strategy is one that will reap you rewards due to your efficiency, focus, expertise, passion and discipline.

by: Suzie Crawford

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