The recent tension in the middle east and the sharp rise in fuel prices have already caused a stir in the Reserve Bank in Australia. Today they increased interest rates for the second time this year. People were on the news saying they were already cash strapped and had been watching their spending. They are going to feel the pinch over the next few months. As real estate property investors, what should we do then? Heres is a list of priorities that need to be addressed: First priority. Exercise extreme caution and prudent due diligence on potential deals Look at ways to reduce debt, particularly in the following situations: * Personal debt (credit cards, personal loans) * Home equity funded personal debt (equity loans used for lifestyle) * Investment debt against non-income (i.e. growth) bearing property Review your property portfolio * Have strategies for protecting interest rate sensitive property * Consider cutting the asking price for your real estate investment property that has been on the market for some time * Re visit your calculations on your present deals based on interest rates being .75% higher. Act to protect your self and provide a buffer Now would be an appropriate time to see your financial adviser and review your investments assets Second Priority Build cash reserves. Cash is king, money talks B/S walks. Increase your financial literacy. Anyone can make money in a boom, but it is much harder in uncertain times. Get your self more education and a mentor, attend more seminars. Renegotiate and lock in employment contracts, particularly subcontractors Defer non-essential lifestyle expenditure Third Priority If you are looking to borrow money for a real estate investment property, start working on a business plan Keep networking with people, you may not need them now, but you may need them in the future, proximity is power! A good peer group of people will propel your wealth creation. Avoid Risky deals that require hard cash Using your home equity to fund non-deductible lifestyle debt (jet skis, holidays, motor bikes and cars etc) Dont quit your job to become a full time investor The financial excess that was in the boom times will quickly disappear when higher interest rates arrive. Times have changed and will change further. Its is critical that you always educate your self to the changing trends in real estate investing. If you need help then seek it out immediately, money and time spent to do this will pay huge dividends in the long run. To your investing success. Leo Love www.therealestateinvester.com PS If any of your family or friends is interested please pass this on to them. |
