Whether you’re looking to buy your own home or an investment property portfolio in 2024, and whether it’s your first or fifth investment, today’s article is packed with ideas on how you can buy the best property in 2024. We are going to talk about 10 different ideas that you can leverage off or use to get the best outcome and set yourself or yourself and your family up for the future this year.
Now, vision is as simple as shutting your eyes or deciding on the type of future and lifestyle that you wish to down the line. I like choices in my future: the option to spend time with the people I care about, to do work that’s meaningful for me, to help other people, to have a passive income stream coming in for life, whether I wake up or don’t wake up and go to work that day.
5 Best way to Build a Property Portfolio
Define your property investment goals and strategy
To really achieve the vision that you want for your future, you do need to break it down to those goals. So, when we think about the goals that we have to achieve that vision you’ve got for your future, we’re breaking it down into your short-term goals, so something you want to accomplish within the next 12 months, or longer-term goals, which is your five to 15-year time period.
Those short-term goals are something you want to achieve in your next 12 months is usually very, very simple. You’re either saving money, so that first deposit or a deposit for that house, or buying a home within those 12 months. Some people come to us, and they want to buy two or three properties in a short period, but it can be simple.
And then when you’re looking at those longer-term goals, that’s when you’re loading it up with other things around what is the passive income you want to achieve within 15 years? What do you want your life to look like that’s going to help you live that life in alignment with your values? It could be reducing your hours at work, being in a position to send your kids to private school, starting your own business, owning your own home outright, relocating, or having a sea change.
These are the things that you want to see in your five to 15-year future that are actually going to help you live the life that you know when you close your eyes and have that vision. We want to spend more time with the people we care about. And we definitely wish to have somewhere between $100,000 and $200,000 per year of passive income in retirement to give us that peace and those choices down the line in the future.
So, strategy is the third thing that I want to talk about. And it’s a super important part of this journey towards building the best starting property portfolio this year. Now, when I first started as an investor, this isn’t good to say, but I just thought whoever bought the most properties would win. I had really no goals except to buy a property every single time the bank would lend me money.
Now, what that meant is that by the time I got to somewhere between my sixth and ninth properties, I didn’t own all of them at that time because I sold a lot of properties on my journey.
But I realized really clearly, and we were talking at that point in my life, I think it was back in about 2017 or so, where I was like, shit, I’ve got all of these properties, but it’s not actually in alignment with the life that I want now, which is more time with the people I care about to cut down from like 60 or 70 hours a week at that point to sort of 30 to 35 and not to work weekends or Fridays anymore.
And so, I went through this process, which hopefully you don’t have to because you haven’t made as many mistakes as I did, where you can start from scratch. Now, if I was starting from scratch and looking to achieve or build a rental portfolio that would give me $100,000 per year in passive income, then our two properties to financial freedom strategy or our three properties to financial freedom strategy could be a great place to start.
But put really, really, this idea would be to go out there and buy two investment properties in your accumulation or your first phase. Then, once you buy those two properties, slowly pay them off over time. We explain the five ways to pay these properties off sooner. And then once you paid them off, you’re obviously in that freedom choices phase where you can do meaningful work and help the world become a better place because you’re no longer reliant on your job as your primary source of income.
Your primary source of income is now coming in passive, whether you wake up or don’t wake up and do the work that day. So, that strategy is the simplest way that I’ve been able to figure out how to get from A to B if you’re just starting. But many of the people who work with us already might own their own home or a number of investment properties and wanna take it to the next level.
Now, for those of you, it’s really a case of reviewing where you’re at and then deciding on where you want to go and figuring out how to bridge that gap in the safest, lowest risk, and lowest maintenance way. Some people might already have an incredible property portfolio or their own dream home, and they’re simply investing because, in 15 years, they want to sell a couple of properties to put a whole bunch of cash in the bank or pay off their own home like our mom’s trying to do.
But the most important thing is following best practices, which means buying houses in Metro markets close to the city, close to the beach, that are tenant-ready on nice big pieces of land in quality suburbs and quiet streets. And if you follow those rules, regardless of where you buy in Australia, you’ll end up in a better position in 2024 than the 90% of people who aren’t watching this sort of stuff.
Preapproval Before Building a Real Estate Portfolio
Well, so you’ve got your vision, you’ve narrowed it down to your short and long-term goals. You’ve got a strategy in place or a clear plan in place on how to get there. Your next step is pre-approval. So working towards actually affording that property, getting yourself in a position actually to buy that property, your next property. So, work with a mortgage broker or the right partners to help you get yourself pre-approved.
In terms of getting your pre-approval, you can work with a mortgage broker or work with your bank manager. It is a pretty simple process. They’re obviously going to ask for a whole heap of documents, and you’ve got to be prepared in getting them to them. But once you know exactly what you can borrow and they’ve reviewed your position, then you can go out there and smash it in the market. You know, so one of two things is going to happen with the pre-approval. They’re either going to say, yes, you can borrow money, and it could be 400k.
Or they’re going to say, hey, like you can’t borrow some money. And when they say that, don’t just take the no, but go, well, why am I getting this no? Like, do I need more savings? Do I need my income to be higher? Or is it just that this bank doesn’t like me and doesn’t want new investment business this year, and I can find a different mortgage broker with access to more lenders that can help?
But I think it’s really, really important that when you get those rejections, not to take them personally and to not sit on the sidelines like so many Australians do for four or five years, but to figure out a plan of attack and your plan for the next 12 months could really just be, hey, I need to save some more money or I need to, now that wages have gone up so much, transfer or put some pressure on my boss to sort of jump me up to where I need to be to borrow money.
The next step from there, once you’ve got your pre-approval and your plan and your strategy in place, is to figure out whether you are going to continue to do this on your own. Are you going to go out there to the market and find a partner to help you do this?
Or are you going to partner with someone like us, a buyer’s agent that can help you get a plan in place, help you identify the right market, the right suburb, the right state, and the right type of property, introduce you to an entire team of advisors along the journey, and then deeply, deeply educate you as an investor so that next time round, you can do it on your own with confidence?
You’ve got a whole bunch of new tools and skills and relationships in your life that you can lean on like coaches and mentors and friends that can help you on that journey to financial freedom as you move forward. Once you’ve made that decision to either keep doing it on your own or to find a partner, then it’s a case of really identifying the right market, the right suburb, and the property.
Check Market Before Creating a Property Portfolio
The right market looks like any of the major metro markets in Australia, like Brisbane, Sydney, Melbourne, Perth, any of the major regional markets like the Sunshine Coast, the Gold Coast, Geelong, Newcastle, those sorts of things, following the fundamentals when it comes to identifying a market. So we really love the look of Brisbane because it’s so undervalued compared to the likes of Sydney and Melbourne.
Within Brisbane, we’re looking for areas that are close to the city or close to the beach or as close to the town or beach as you could afford. We’re looking for good quality houses on large blocks, quiet, family-friendly streets. We’re looking for suburbs that have great access to infrastructure and amenities, so great schools nearby, good transport options nearby, either a solid bus route or train line, things like hospitals, universities, great shopping centers, good main roads that may take you in and out of the city.
We’re looking for areas that have strong incomes, a high percentage of owner-occupiers, and a lower percentage of renters. We’re looking for areas that have solid demographics, your mum’s and dad’s type buyers, family-friendly regions that are going to have good long-term potential for capital growth, and that are undervalued right now.
For sure, and then once you’ve nailed the market and the suburbs, we get down to the property level. It’s not rocket science, guys. The bigger the blocks of land, the better. We like stuff between 400 and 1,000 square meters when we can get it, quiet streets, a nice big backyard for the family. Open sort of living, dining, and kitchen onto the backyard-type setups with good-sized bedrooms.
But what you really want to do in 2024 is narrow it down to one market, for example, Queensland, one city, Brisbane, one part of the city, for example, North or South Brisbane, and then a couple of suburbs. And once we get it to that suburb level, that’s when the fun really begins, slash the crazy part of the journey. So, we set up some simple alerts on realestate.com. Let’s say that we’ve decided on the northern beaches in Brisbane because they look really good right now, and the guys in the financial review are frothing on the area.
For example, Redcliffe, Clontarf, houses on 500 plus square meter blocks of land under whatever price point you want to set for yourself because the brokers told you that. And then we play the waiting game where we sort of call the agents each week, have a look on realestate.com each day, and then the right one comes up. Now the market is really hot right now.
Negotiating Property Portfolio Management
A lot of the agents are going to let you in on what the property should be selling for, or at least the seller’s expectations for what the property is going to sell for or it’s going to have an asking price online. So, when it comes to negotiating, you want to get as much information out of the agent before putting forward your first offer, especially when you’re only planning on putting two offers forward. So, the first step is simple.
It’s your first offer. We want to make a good offer based on the agent’s feedback and pretty good terms. So, in Queensland, you’re allowed to accompany your offer with terms and conditions. That might look like a 14 or 21-day finance clause. It might look like a seven to 14-day building and pest clause, with settlement terms of anywhere between 30 and 60 days. Things like that are what we talk about when we mean terms of the contract and then the price as well that’s going to go with it.
You want to take feedback from the agent and put forward a good price based on that feedback, but it still needs to be quite your best offer. Step two is where we go: great offer, great terms. So, if you’re in a position to reduce your finance clause, bring back the number of days for the building and pest clause, and discuss with the agent exactly what settlement the sellers want. Bring back the settlement terms as short as they can be, or in some instances, a little bit longer if the seller needs to move out.
A great offer sometimes means a shorter amount of time. It means what is going to sell to the sellers because it’s what they need, as well as the best possible price. So, discussing whether there are other offers on the table, what those offers have been if they’re in a position to tell you what your first offer was, whether you received a counteroffer from the seller, and then that second offer is taking into consideration all of those things and giving the agent exactly what they think is going to sell the property to the sellers.
Sell the property to the sellers. Come back to me. Exactly what is going to sell your offer to the sellers of the property so that they’ll eventually sell the property to you? For us, terms are really important. So, talk to your solicitor before you put any offers in to make sure you’re protected and that you can safely look at the property and do your due diligence on the property, which is our next step.
I also want to put a due diligence clause in the contract that says, and a whole bunch of other stuff to protect myself and my clients. We would normally then, at that point, obviously go and inspect the property. You’d want to see the property if you could yourself; otherwise, pay a third-party inspector to have a look, or your buyer’s agent would go and have a look. On top of that, you want a building and pest inspection, the solicitor to review the property, and obviously, the broker to organize the valuation and all the finance stuff.
Depending on your strategy, you also want to engage an insurance broker to look at insurance for the property, a builder, building and pest inspector, engineers, certifiers, or whatever you need to feel comfortable. Now, hopefully, you’re aiming for lower maintenance tenant-ready properties, but there are a whole lot of variances in that. So, due diligence is important, and that’s why having some of those extra conditions in the contract can give you a bit of breathing time.
Obviously, agents don’t absolutely love them, especially in a hot market when cash offers with no term start coming out. Still, our advice has always been from our solicitors to ourselves and our clients that you’re better protected from losing property than you are to buy the wrong property and put yourself in a really bad position down the line. One of the final steps, or the ninth step, is managing the property. So you’ve gone through due diligence, everything looks okay, you’ve got finance sorted, and then you want to work with the property manager.
Still, in terms of looking after your property in the next few years, you really want someone who’s going to inspect it at least three times a year, that’s going to advertise it well, that’s going to price it well, that knows the local market, and that also if the tenant goes the wrong way, they stop paying their money, they start trashing the property. They’re happy to breach that tenant and take them to the tribunal and boot them out of the property if they need to, to look after your property like it’s their own.
On top of that, I go a bit OCD, so each time tenants move out, I get sort of a bond clean, a bit of a weed and feed a garden tidy up, and a bit of a high-pressure wash down of the house. I’ve learned the hard way from having a lot of properties over the last 14 years that how well you treat them is the quality of your tenants and the quality of your management.
To think that your manager’s just going to look after the property without you managing your manager is crazy; I learned that the hard way as well. So what I do is at the start of each year, send them an email and say, thank you so much for everything. This year, I want three inspections. If there are any problems, I want you to fix them.
Conclusion
Once you’ve executed nine out of the 10 steps, reviewing the process you’ve just gone through is a really exciting step. It’s super important to not only look at what you set out to do in the beginning and see where you are but also get excited about what you’ve just done. So you want just to sit back, relax, and enjoy that that is something that you’ve finally achieved and ticked off your goals. But then going back to what you said at the beginning, which is that vision and then you shorten long-term goals.
