When’s the right time for your second investment property?
As any successful investor will tell you, while buying your first property can be thrilling, it is only the beginning. To achieve your goals and truly secure your financial future, you need to keep adding to your portfolio. But how do you know that thetime for buying a 2nd property has come?
Signs you are ready to buy your 2nd property
As every property investor will move at their own pace, there is no clearly defined timeline for growing a portfolio. However, there are a few key signs that you might be ready to make your next move:
1. You have built a good amount of equity
There are a few reasons capital growth is a key focus for property investors. Most significantly, it increases the value of your investment and the amount you would receive if you sold the property. It also increases your stake in the property, which iscommonly referred to as equity.
Equity is key when it comes to buying a 2nd property as it can make it easier to secure finance. Specifically, equity can be leveraged for use as a deposit, reducing the need for significant savings. As such, if your first investment property has notablyincreased in value, it could be time to grow your portfolio.
2. You have more income at your disposal
How much you earn is a major consideration when seeking finance for an investment property. As such, if you are earning more, you will be in a stronger position to buy a 2nd property. This additional income could come from an increase in your salary orthe returns you receive from your first investment. It will also mean that you have more of a financial buffer to deal with any unexpected costs.
3. Your first investment property is performing well
There are no guarantees in investing and some properties simply do not do as well as expected. It can also take time for you to find your feet as an investor and get comfortable with the process. And buying a 2nd property before you are ready will onlyexacerbate your stress and confusion.
As such, before you add to your portfolio, your first property should be set up and provide steady income. You should also feel in control of your investment and comfortable with the idea of buying a 2nd property.
4. Market conditions are conducive to buying a 2nd property
In addition to you being ready for it, the market also needs to support you to grow your portfolio. This means finding an area where vacancy rates are low, rental yields are strong, and growth forecasts are positive. Obviously, this is something a goodBuyers Agent, can help with. *
Still not sure if you are ready?
* We work with a suite of professionals, and can refer you to buyers agents, conveyancers/solicitors, accountants (specialist in investment property strategy) etc
For more information on how we can help you achieve your investment goals, book your free Property Investor Assessment session today.
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