How to turn a new year’s resolution into reality

How to turn a new year’s resolution into reality

Posted on Tuesday, January 10 2012 at 10:07 AM

Most of us make some sort of new year’s resolution every year. Whether it’s paying off debt, saving more money or getting our finances in order, there is usually some sort of goal hanging around our heads in early January. It’s easy to make a resolution – the difficult part is turning it into reality.

If you have big plans for your financial future in 2012, there’s no better time to start achieving your property goals than right now! A few simple steps and before you know it, you might have found your next property.

Step 1. Realise the potential.

Gavin Hegney of Hegney Property Group says by this time next year, interest rates will probably be down around three quarters of a per cent. This means rental yields will be equal to the debt you have to pay on residential property in places like Perth.

“You’ll get yields on property equal to borrowing costs,” Hegney says.

“With a drop in interest rates, something has to give.”

Rents are also likely to rise, so now is the time to realise the future potential of investing in property and do something about your future, while everyone else is still recovering from the 2011 hangover!

Step 2. Research.

If your goal for 2012 is to buy a property, then get online and start looking at properties in your desired area! You can go to open homes, check with council to see what plans they have in store for your desired suburb and also start researching which homes sell for what and where. Jane Slack-Smith of Your Property Success adds you might also need to spend money to improve your knowledge. This could be a $200 property report, a property course or buying some software.

“It’s like going to the gym. If you pay $100 for a month and you don’t go, you feel bad. It’s easy to say ‘I will go on’ and then put it off.”

If you don’t have the cash, consider the local library. Borrow books that inspire you and books that will motivate you to go out there and get that property!

Step 3. Get your finances in order.

Hegney says investors should revisit their loan situation and make sure they’re getting the best interest rate.

“Fixed rates have really changed and there are incredible deals at the moment,” he says.

This might mean a trip to your broker or bank, but don’t just ignore the great loan options around right now.

Slack-Smith adds you should also write down your financial goals, because this will remind you daily of what you plan to achieve in 2012.

Step 4. Set a budget.

Slack-Smith says many people need to work out how much money they can spend or save. With interest rates dropping, you might suddenly have a bit more cash.

“Get rid of the credit card or find out how much equity you have,” she says.

“Take action. Tap into the equity, do something now.”

Step 5. Get lines of credit in place.

“Prepare for the worst but expect the best,” Hegney says.

“If necessary, look at increasing debt but don’t use it.”

He adds a line of credit is about managing your risk, just in case you lose an income or if your wage is reduced.

“If the worst case scenario happens (with the European debt crisis) you’ll be in an ideal position. A low market is low on sentiment and that means people won’t be viewing numbers in the light they should be viewed. They see the glass half empty, not half full, and usually that creates an undervalued market. When that happens, people should actually be less scared and prepared to take more risk.”

Step 6. Found a property you like? Look for something with land.

Hegney says investors focus on yields in a slow market but the prospect of capital growth should also be remembered. For this reason, he advises investors to look for properties with rental yields of close to five per cent but 70 per cent of its value should be in the land.

“This means you’re not giving up capital growth when it returns,” he says.

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