Setting goals is key to reaching your financial objectives regarding property investments. How can you make better investment decisions by setting S.M.A.R.T goals?
The S.M.A.R.T. The S.M.A.R.T. is an acronym that stands for Specific, Measurable. Attainable. Relevant. Timely. It can be used as a guide to help you set goals that will help you achieve your stated goals.
These principles can be used in your personal and professional life and when you are building wealth through property investments.
This is how to make better property investment decisions with S.M.A.R.T. goals.
Specific
Describe exactly what you would like to do with property investment. Example: I would like to retire at 55 with a property portfolio that generates $2,300 per workweek.
Measurable
Your property investment goals should be measurable. How many properties are required to achieve your property investment goal? Assuming a 4.5% net rental return, your residential property portfolio must be worth $2657,777 with no debt to earn a passive income of $2,000. You might also want to include commercial property in your portfolio, which has a higher average yield (6-8%). The big picture is the most important thing. Next, you need to reverse engineer what it takes to achieve your goal. Your goal can be broken down into smaller, more manageable pieces. What number of properties are you required to purchase to make your portfolio worth $2,657.777? When and how long do you plan on buying these properties? How much money can your family save yearly to invest in your next property? What type of properties would you like to buy?
Attainable
Your property investment goals should be achievable. It’s not a good idea to set unrealistic goals for property investments that you won’t achieve. You will feel discouraged. Don’t let your budget dictate how many baked beans you will eat over the next five years. Living life like a hermit is not sustainable, so make sure you have enough money for entertainment. You should also allocate money for large expenses if you plan to have children or get married.
Relevant
Make sure your goal for property investment is meaningful to you. What are you looking to achieve? Many people desire to save money and invest in property to retire earlier. While that’s great, property investing isn’t risk-free. Property investment is best made with a long-term perspective. There will be fluctuations in the market. Property investment may not be right for you if you are easily stressed by the risks and wake up worrying about negative media headlines every night.
Timely
It is important to reach your property investment goals on time. It will depend on your goals and your age. It can take longer for younger investors to achieve their goals than their older counterparts. Investors in their 40s and 50s might want to look into property development or development syndicates to accelerate their goals. Don’t be too ambitious with your timelines. Don’t set a goal to purchase 3 investment properties within 3 years if your budget is insufficient. Instead of setting yourself up for failure, spreading these purchases over a longer time would be better.
Clear goal setting is essential to property investment strategies that build wealth.
The S.M.A.R.T. Investors can use the S.M.A.R.T. to track and set goals to help them reach their financial goals.
