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Debbie Roberts: What I would do if I had $20K to kickstart my investment journey

Tuesday, February 25, 2020

IMAGE CREDIT: UPSLASH

Well, I’ll start by saying what I would NOT do. I would NOT start looking for an investment property yet. $20,000 deposit will buy you a rental property up to the value of about $66,000 if it is an existing property (30% deposit requirement), and $100,000 if it is a new build (20% deposit required). Let’s face it, your choices will be extremely limited in those price points. A quick search today on Trademe showed absolutely nothing in either price point (apart from one leasehold property - umm… NO, and one apartment that needed remedial work done - again, NO, not appropriate for this starting financial position). 

What I WOULD do, is to start doing some research.

  1. Learn as much as you can about money management. Yes, I know it might be boring, but it is vital to your success. Create a budget that will work for you.
  2. Think about whether it is possible to tighten your belt to increase your savings faster. This might involve making some short term sacrifices to help you to increase your available deposit in the shortest time frame possible - for example:
    1. working out at home instead of paying for an expensive gym membership
    2. quitting smoking (that will save you a fortune, and will also be better for your health!)
    3. drink less alcohol (again, saving you money and also no doubt better for your health)
    4. Plan your grocery shop carefully so you only buy what you will actually eat - you’ll be amazed how much money you might be literally throwing out as food waste
    5. Eat out less frequently, make your own lunch instead of buying it, etc.
  3. Pay off any credit card debt or Hire Purchases as quickly as you can. This will not only help you to build up your house deposit faster (as soon as those are paid off, you will be able to start saving that extra money instead of paying interest on the debt), but it will also help to improve your lending capacity when you get to the stage of applying for your mortgage.
  4. If your parents are in a position to help you via equity gifting, then investigate that option with them.
  5. Look into the possibility of whether you would qualify for government grants to boost your deposit if you were to buy a home.
  6. Consider investing your $20,000 in the sharemarket to get a better return than you will currently be getting in your savings account. Seek professional advice for this, and diversify to reduce your risk - don’t bet it all on black/red!
  7. Go here and watch the video at the bottom of the home page called “Beginners Guide to Buying Your First Property” for some free information.

If you wanted your first purchase to be an investment property rather than a home, then do some more research.

  1. Join your local library and read every property investment book you can lay your hands on.
  2. While you are at it, read every personal development book you can lay your hands on too! One of the biggest battles you will face as a new investor is the one with your inner voice!
  3. Download and read our free e-book - “Beginners Guide to Property Investment in New Zealand”.
  4. Attend as many free and/or low-cost training seminars as possible - be cautious though! Many of these come part and parcel with hard sells for expensive coaching/mentoring programs, and/or hard sells for investment properties. If you want to attend one purely for educational purposes, make sure that you come and see one of ours. Register here.
  5. Join your local Property Investors' Association so you can further your support network of other like-minded individuals, as well as increasing your knowledge with their regular group sessions e.g. monthly keynote meetings.
  6. Be careful who you get your advice from. Everyone has an opinion about property investment (even if they’ve never bought a rental property before), but as the saying goes, “Opinions are like belly buttons. Everyone has one, and most of the time they are just full of lint”. Surround yourself with a team of professionals who will be able to help you on your journey. To quote Henry Ford, “If you are the smartest person on your team, your team is in trouble”.

Finally, remember that success is not about luck. It is about your determination to succeed.

I enjoy speaking and blogging regularly for the APIA. If you are just starting or if you are stagnating and want to break through, feel free to email me your questions. I am always happy to connect! 


ABOUT THE AUTHOR

Debbie Roberts 

Debbie is an Investment Coach and Director of Property Apprentice. Property Apprentice provides ongoing training for investors as well as regular free seminars for beginners. 

 

 

 

 

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I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

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Stella Shao

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Stephen Weatherall

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Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

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