Start Small & Grow Your Property Portfolio

 

Start small to minimise risk

When starting any new venture there is an element of risk. This risk is present due to lack of experience, and lack of knowledge.

However, the best way to learn is to get started and learn as you go, dealing with challenges as they come. Only ever invest what you can comfortably afford to lose, then you will always sleep at night.

Investment Property Risk

The risks of investing can be sizeable, and need to be considered when you are working out your starting strategies. Particularly in the financial sector, regulations are set in place that penalise the investor for changes in strategy (eg selling one asset and buying another, or breakup of a partnership etc).

For example, when you sell an investment property, the penalties you pay include:

Capital Gains Tax
Commissions to casino internet the real estate agent
Bank fees for discharge of your mortgage
Legal Fees

These fees (risks) could range from minimal to tens or hundreds of thousands of dollars (or more).

Share market risk

When you invest in the share market, the penalties you pay are mainly brokers fees, and these will reduce your profits, especially if you sell before your shares rise in value.

Other risks from property and shares include: tenant damage, repairs, mortgage interest (especially if interest rates rise), and margin calls (fees the bank charges you if your shares drop in price and you have borrowed against them)

Starting small involves buying an affordable first investment property, or investing in the share market (or other asset class) with an amount that you can comfortably afford. Is it risky to be highly leveraged (borrow considerably against an asset) when you first start investing. Equally when starting a business, consider starting small and building your business while you learn. Borrowing heavily to start a business can also be very risky (we have all heard that 80% of businesses fail in the first 5 years!)

How to get started?

The best way to start in any venture is to learn as much as you can first, and when you are satisfied with your education, buy the best investment / business you can comfortably buy at the time. It will probably be the worst investment you ever buy, but getting started will be the best investment you ever make. Don”t be afraid to take action – if you never actually buy an investment, then you are never going to be an investor.

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