Learn how to become a property investor

With house prices in many areas falling across the country, now is an attractive time to get into the property investment market. In the first of our series of stories from expert investor, Summerland customer and Northern Rivers local, Wayne Jeskie, learn the secrets of how Wayne got into the investor market aged 31 and how you can enjoy a slice of the investor property market pie.

 

Hi Wayne, what was your first investment property?

It was a block of land. It was 1,800 metres squared and I paid $128,000 for it. In today’s money that would be worth over $210,000.

Is it true you must be rich to be a property investor?

You don’t have to be rich, but you have to be educated. The more educated you are the better you will do and the more relaxed the investment will be.  Anyone can educate themselves. I worked hard to develop an understanding of investing to then be in the position I am now.

Find out why you want to get into property investing

How did you get into investing?

I thought to myself if I wanted to invest in something, I wanted to do it where I could create $40,000 a year. Then I thought, what would it be?

I searched for five years and went on as many courses as I could, some free and some I had to pay for. I took on mentors and admitted to knowing nothing consistently and asked lots of questions. When I purchased an investment property, I wanted one where there wasn’t just one tenant paying my mortgage. I preferably wanted more tenants to pay for the property.

It had to be something that was able to give me an income and was able to service my mortgage if one tenant vacated the property.

That is essentially how I started off. I was also very risk adverse as I wanted to make sure I could always pay my mortgage.

The first rule of investing is don’t lose money. The second rule is to not forget the first rule.

For those new to investing, what are the key differences between home buying and investing?

There are a few interesting strategies here. My business mentor, who owns a huge finance company in Melbourne taught me this strategy that you start by buying your first home which you live in. Once you have that house, you don’t do anything with it for 12 months and essentially ‘go to sleep’.

After a year has passed, you wake up and get that house re-valued. You then find out if there’s enough equity in it for you to buy a second home. If there is, you buy another house. If there’s not, you go back to sleep for 12 months.

Once you have that investment property, you keep an eye on what is going on and observe, but you let a Property Manager look after it for you. So long as you have the right people looking after your property, you won’t have to do too much.

I also always had some money in the bank as a shortfall, just in case the hot water system broke, I had a safety net.

Take care of the detail and plan for the unforeseeable.

What’s the one piece of advice you have for people considering buying their first investment property?

You’ve got to know why you want to do it. Some people may say they want to create a passive income of $30,000 within 12 months. Then you must work out how you’re going to do that. Do you look at an investment property, do you buy a unit and renovate it, or do you buy a block of land and build a house? Even though these might be good ideas, it is all down to the individual as to what they feel is right for them.

Some people may feel if they go out and buy a block of land and build a house, it is too overwhelming. They may feel they want to just go out and buy a house they can rent out straight away; where there is no real stress on them. The rent is coming in every month, and the property is slowly increasing in value.

Do whatever feels right for your personal situation.

Are there any characteristics that you look for in the location when you buy an investment property?

This goes back to ‘why are you investing?’ Some people may not feel comfortable buying a property in Western Australia. Other people are very happy to do this. If you’re buying an investment property, it has to be somewhere where there’s a demand for rent.

Find out what the demand for rent is in the area you’re thinking about buying in. Better still, find out from a real estate agent what type of property has their biggest demand; 1 bedroom or 4 bedroom houses?

Then work out the demographics of that area, if the demand is increasing, and how many vacancies that real estate agent has on their books currently.

If you know what people want, then you as an investor can supply the demand for that want.