PROPERTY INVESTING
youshouldunderstandto elevateyourchancesof
buildinga crackingpropertyportfolio:1
Timingis everything
TherearetwogreatregretsI commonlyhear
fromseasonedpropertyinvestors:- I startedtoolate.
- I sold too soon.
The former can be remedied by looking at my
steps for learning how to adopt the winning investor
mindset. The latter is often a result of not accepting
that property is a long-term investment. Long-term
investors sit at the pointy end of the plane.
Most investors looking for solid gains across
their portfolio’s lifetime need to be in it for the
long haul. Buying quality property, with the right
ingredients, means sometimes you can ride a rising
market wave and profit quickly – just ask Sydney
property owners who bought in 2011. However, if
you look back over the 15-year period in the run-
up to 2011, you’ll find growth in Sydney property
values lagged other capital cities for most of a
decade before it had its boom run.
Big money comes from patience; you need to
allow compound growth to do its thing over the
long term (more about compound growth later).
Be prepared to resist the temptation of making
a fast buck and selling too soon.
2
Nothing beats location
You can’t out-train a bad diet, and you can’t
sweeten a property lemon. It’s fine to have the big
home with the tasty finishes, but if it’s positioned
on a main road in an isolated suburb where’s
there’s an oversupply problem then your chances
of realising a great return are limited.
Location is the key to success because it’s in
“limited supply” and can’t be changed regardless
of how much money, time and effort you have at
your disposal.
Make sure you research your locations well,
looking at region, suburb, street and individual
property to ensure you maximise your chances.3
The nation is your market
Real estate in Australia has evolved at a rapid
pace over the past decade. Ask your elders (for
millennials, this means anyone over the age of
40) about where they were most likely to invest
two decades ago. The vast majority – if not all –
would say the suburb they lived in or, if not their
home suburb, certainly somewhere within their
home cit y.
Today it has never been easier to be a borderless
investor, capable of seeking out markets anywhere
across our broad, brown land. There is a wealth ofinformation readily available online and a growing
number of professionals capable of helping you
study and acquire an investment property in a
multitude of areas.
Don’t limit your thinking to tracking those five
suburbs you know and love, where you used to
ride your bike and play street cricket. Broaden
your horizons and take advantage of all the real
estate that’s on offer.4
Free your mind – the rest will follow
I understand the concepts of gut instinct
and emotional connection. They can be impor-
tant tools when you need to react quickly to the
question of “Should I stay or should I go?” To be
a successful investor, however, the numbers must
make sense first.
As a fundamental, I implore you to run through
the figures carefully before making decisions that
will affect your financial security. Start with your
home budget and make sure you won’t go broke- or, at least, have a buffer – if you must take on a
higher level of risk. Check your loan commitments
and ability to deal with a mortgage.
Check and recheck the figures on properties you
are interested in investing in, too. Don’t just take
an agent’s word for it. Do your own research into
rental income and comparable property values.
Do they all make sense?
Get the numbers right so you can rely on your
heart and gut without fear when opportunity
presents itself.
Personal budget
Your personal or home budget should take pride
of place among your fiscal considerations. A
property investor’s home budget should be a frank
and fearless dissection of what it takes to run a
household and not go broke.
There are plenty of budgeting tools available
online to use to work out your world of dollars
and where they’re spent. Your talented mortgage
broker will also help guide you through the personal
budget process as part of your loan application.
A personal budget initially helps you track and
report how each dollar of your income moves
through your household. The great thing about
budgets is that for many of us they become ingrained
and automatic over time.
I find, for example, that I no longer need to track
my budget with surgical precision. How and where
I spend my money to fulfill my family’s wishes
is now second nature. I’ve become holistically
better at money management through achieving
a necessary income, keeping an eye on my goals,
regularly rechecking my personal barometer and