When it comes to successful property investing, I have found there are three golden rules that smarts investors follow.
#1: Buy Where It’s Booming
My first golden rule is to buy where it’s booming. That means unless your local area is booming, you need to be looking further afield. Why buy where it’s booming? You’ll get more growth more quickly, allowing you to get into your next property sooner. If you buy locally, you could be stuck at the same number of properties for years.
If buying where it’s booming makes you nervous, then let me assure you that plenty of people (who probably aren’t as smart as you anyway) are doing incredibly well with this strategy. If you’re nervous because you don’t know or understand how to buy where it’s booming, the best thing you can do is get an expert (like myself and my team) to help you.
#2: Only Buy Cashflow Positive Properties
My second golden rule is to only purchase properties that are cashflow positive.
If you break this rule, you’ll very quickly run out of money and not going to be able to buy anymore properties, and your portfolio will stop growing. But if you follow this rule, as long as you have the leverage and equity, you can keep your portfolio growing indefinitely. So, if you want to be successful, only buy cashflow positive.
#3: Never Sell!
My final golden rule is to never sell. And certainly never buy with the intention of selling in the near future.
When you sell an investment property, you have a number of expenses, like capital gains tax and agent’s commission. But more importantly, you will never make another dollar from that property again. The name of the game is to buy time so that you can hold onto your properties long-term so that you can reap the benefits.
So, why do people sell? They’re afraid. They think the market’s going to collapse. They sell because they need the money but they don’t understand how the finance structure works so that they can get money from their property without having to sell it.
If you’re thinking about selling one of your properties, please talk to an expert (like myself) first! The only time you should ever sell a property is if it’s an absolute lemon that has got serious problems that are costing you serious amounts of money. Otherwise, hang onto it. I have far too many clients who tell me (too late) that they’ve sold a property and regret it.
Those are my three golden rules. Follow them and you’ll be on track to becoming the 1%.
Daimien Patterson is the CEO of Integrity Property Investment, a property investment company based in Australia. He regularly produces books, blogs, and videos on the topic of property investing. Head to [integritypropertyinvestment.com.au/pi4b-webinar-recorded] for instant access to Daimien’s free property investing webinar where you will learn all the things they didn’t teach you in school!
