How To Make Better Property Investment Decisions Using S.M.A.R.T. Goals

When it comes to property investment, goal setting is paramount to achieving your financial objectives. So how can you make better investment decisions with S.M.A.R.T goals?

The S.M.A.R.T. criteria (an acronym meaning Specific, Measurable, Attainable, Relevant, Timely) is a guide that can be used to set objectives that help achieve your stated goals.

This can be applied in your career, sporting event, personal life, or even when building your wealth through property investment.

Here’s how you can make better property investment decisions using S.M.A.R.T. goals.

Specific

Outline exactly what you want to achieve through property investment. For example, I want to retire by the age of 55 with a property portfolio that provides a passive income of $2,300 per week.

Measurable

Make your property investment goal measurable. For example, to reach your desired goal as specified above, how many residential properties do you need to own? Assuming a 4.5% net rental yield, your residential property portfolio would need to be worth $2,657,777 and have no debt to gain a passive income of $2,300 per week. Perhaps you want to incorporate commercial property into your portfolio as well, which is higher yielding (typically between 6-8%). Start with the big picture and then reverse engineer what you have to do to reach your goal. Breakdown your goal into more measurable aspects. How many properties do you need to acquire so your portfolio is worth $2,657,777, when do you plan to buy these and in what timeframe, what’s your household budget, how much money can you save each year for your next investment property, what type of properties do you want to buy etc?

Attainable

Make your property investment goal attainable. There’s no point in making unrealistic property investment goals that you will never reach. This will only serve to make you feel disheartened. When setting a household budget, don’t be too conservative that you have to eat baked beans for the next 5 years. Living the life of a hermit isn’t sustainable so allocate money for entertainment. If you’re planning on having children or getting married, then allocate money for these types of large expenses as well.

Relevant

Ensure your property investment goal is relevant to you. Why do you want to reach this goal? Most people want to invest in property to retire earlier and provide a more financially secure future for their family. That’s fine but property investment is not risk free. Property investment requires a long-term view and there will be ebbs and flows in the market along the way. If you’re the type of person who is easily stressed over the associated risks or is kept awake at night about negative media headlines, then property investment might not be for you.

Timely

Make your property investment goals timely. This will depend on the size of your goals as well as your current age. Younger investors in their 20s and 30s can take more time to reach their goals compared to their older counterparts. Therefore, investors in their 40s or 50s may want to consider property developments or development syndicates to fast track their goals. Similarly, don’t be unrealistic in the timeliness of your goals. If your budget won’t allow you to buy 3 investment properties in 3 years, don’t make this your target. It would be better to make these acquisitions over a longer period rather than set yourself up for failure.

When it comes to building your wealth through property investment, clear goal setting is paramount to your property investment strategy, in order to achieve your objectives.

The S.M.A.R.T. criteria can be a simple yet effective way for investors to set and track their goals to help ensure they reach their desired financial outcomes.

 

Author bio:  

Damian Collins is the founder and managing director of property investment consultancy Momentum Wealth. Offering market leading research and advice on the Australian property market, the company helps clients accelerate their wealth through property investment by assisting them in the strategic planning, financing, acquisition, management and development of their commercial and residential investment properties. Damian has completed a Bachelor of Business at RMIT University and a Graduate Diploma in Property at Curtin University. Damian is a board member of the Property Investment Professionals of Australia (PIPA) and is the Deputy President of the Real Estate Institute of Western Australia (REIWA).