Not being Investment Ready may cost

Not being Investment Ready may cost

Posted on October 10, 2014 by Mirren Property Investment

Have you ever heard someone say “I wish I’d never bought that Investment Property” because it’s costing me money not making me money!”

Everybody’s finances are different but there is one critical factor in Property Investment. It’s making sure you are Investment Ready before you buy a property. The risk is that if you don’t understand your own financial position or what I call your “financial fingerprint” then you will most likely buy the wrong property for your own individual circumstances.

So how do you go about understanding your “financial fingerprint”? Here’s an easy 5-step process to follow:

1. Work out where do you want to be and what could stop you

You need to know what your goal, dreams are. Where do you want to be in 2, 5, 10 years time and what amount of money will you need? Next make sure you understand your current financial position (your assets and liabilities) so you know where you are stating from and what you will need to get there. Finally, what are your existing money frustrations otherwise these will stop you from reaching your goals.

2. Have a strategy to get there

People have many ideas what they want but don’t sit down and work out a financial strategy to achieve their goals and dreams. This is important to understand so you can know you are heading in the right direction to reach your ultimate destination and also have wins on the way.

3. Know where your money disappears to – the “B” word

That’s right – you need to have a budget. A budget is not a restriction, it’s your friend in achieving your goals. Some people will say to us that they never have enough money to pay the bills, or they’re paying too much tax. In most cases they are spending money in areas that they are not really aware of or they have too many credit cards that have a hidden cost. Tracking what you earn and spend via a budget is essential in getting investment ready.

4. Develop good money habits

Most financial frustrations come from bad finance habits. These include not knowing were your money goes and working very inefficiently with money by paying too much in interest. This means you actually increase your debt your debt instead of growing you net worth. It scary but a lot of people in Australia are virtually one to two months away from bankruptcy.

5. Make sure you have a buffer

We insist that clients aim to have at least a 6 months buffer to cover their all their expenses for 6 months if something goes wrong before they invest. That takes the pressure off by creating a safety net. After that you can look at insurances that can cover other unforeseen circumstances.

Follow these five steps and understand your financial fingerprint, then you will be “Investment Ready” to find the ideal property to match your financial fingerprint. That means you won’t ever have to tell your friends “I wish I’d never bought that Investment Property because it’s costing me money not making me money!”

If you would like to learn more about getting Investor Ready, we have a Free Financial Freedom Calculator you can download along with other great resources to help you safely invest in property.

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