4 Key Actions – After you Buy Your First Investment Property.
The actions you take after you buy your first investment property can pave the way for continual wealth creation. Wealth in respect to: protection, knowledge, experience and financial.
1.Organise the Management of Your Property
The key tasks that fall under this area include:
- Securing a tenant if someone is not currently living in the property
- Completing any repairs/renovations in readiness for a tenant (which will also help with securing both a good rental return and a good tenant).
- Setting up your internet banking for the loan account
- Schedule in preventative maintenance checks which include smoke alarms, pest issues to attend to, structural repairs, water leaks, mould, etc.
I highly recommend you don’t try to self-manage if:
- You don’t have the experience or knowledge.
- You don’t have the Time. If you are managing your property directly, you need to make yourself available, which can monopolise a lot of your time, particularly as your portfolio increases.
- To avoid direct contact with the Tenants. In my experience, having a third party acts as a healthy buffer between you and the tenants.
When outsourcing the management of your property to a property manager, check their credentials and experience. Even pick up the phone and speak to one of their existing clients. You want to get a good read on their honesty, diligence, pricing/commission transparency, and how attentive they are to tenants. Having a good relationship with both tenants and landlord is important in my view.
Keep a good relationship with your property manager. They are your eyes and ears. Continue to build rapport with them. Have conversations around how the tenant is maintaining your property. Don’t be lapse. Stay on the pulse. Chase them up on any outstanding matters. They are also ‘on the ground’ and can relay market conditions, both rental and sales market, to you. A good way to both grow your knowledge and relationship.
2. Administration of your Portfolio
Keep a good record of all transactions. You can set up a spreadsheet to record income and expenses. This will assist at tax time, significantly reducing the time for you and your accountant. Use the spreadsheet to also note money is being received and bills are being paid.
As your portfolio grows the administration requires more time. There is more mail coming through, then you have ever experienced before. If you again, don’t have the time for this, then outsource. A bookkeeper can be one of the best decisions you make in your life.
To tighten your tracking system, you can also set a separate account for your property investments and link them to an accounting system, for example, Xero – this provides the utmost traceability. A good idea if you are heading accumulating a lot of properties.
3. Stay in the Game
A lot of people buy their first investment property and then literally put their feet up. I’m suggesting you don’t. I’m suggesting you use this moment to start your journey, not put it on hold or end it.
Well done you have brought your first investment property, celebrate, have a moment, but don’t become complacent. This is really when the fun starts. You can speak the language a little more. You have had direct experience. You are officially ‘in the game’.
Speak to the people that have large property portfolios, learn from them, go to seminars, webinars, expos, read books, articles, listen to podcasts, etc. You are at the very beginning. The more you spend time with experienced property investors, the more this will become your normal.
4. Start looking for your Next Deal or the very least, a plan around the timing
How quickly can I go again?
This statement would make you feel nervous if you haven’t bought your first property investment. But when you do, and configured a system that works for you, this question won’t make you feel nervous in the slightest. You’ll get excited and want to go again. Just make sure you are working with good people around you and you don’t go off the course because you are feeling excited.
Have the conversation with your broker. Even have the conversation with your broker pre-settlement of your first property. Get the information upfront. Plant the seed in their mind, so they know what to expect going forward.
You might even start thinking about other wealth generating strategies. Building a good base with property investing is a good place to be in, however, I recommend you always keep an open mind. Stay curious.