When it comes to property, are you a leader or a follower?
I definitely subscribe to the practice of ensuring that you have a good team of people to help you on your investment journey. However, I also need to point out that if you are just starting out on your property investment journey, it’s not enough to simply follow others in where and how they invest.
You can’t become a successful investor if all you ever do is attend seminars, buy what is on offer, or listen to the secrets being spruiked as if they were gospel truth. If this is you, then you’re only ever going to be getting the leftovers, or buying in areas where the person who makes the most profit is the one who sold the property to you.
Let me tell you about a client of mine. When Susan and Martin came to my company for assistance, they already owned six properties and seemed to be doing pretty well. They had purchased all of them from a mortgage broker who had gotten them some good deals on some loans, who, in turn, had links with a developer that meant that he received a handsome commission for each sale that he helped effect. Therefore, all of the properties that Sue and Martin owned were in one area and all were very similar types – townhouses purchased off the plan.
In truth, Sue and Martin were being spruiked without realising it was happening. They trusted this broker and he never mentioned the sizable commission, as the law doesn’t require him to. When I quizzed Sue and Martin about whether they thought they were good investments or not, they didn’t really know, and when I asked them about why they had purchased them, they couldn’t really answer that question either. It was fantastic that they had seriously started to invest, but there were a number of issues. Let’s break them down:
- All the properties existed in the one area, which meant if that one area slowed down, all of their properties would also slow and further leveraging would be difficult.
- Most investors, after purchasing six properties, would be becoming more knowledgeable and self-sufficient, but as Sue and Martin had relied totally upon this one adviser, it meant that they were not developing as investors. Investors who develop skills along the way are more likely to be those who also recognise hotspots before the crowd does.
- In Sue and Martin’s case, they had also met significantly higher buy-in costs due to the commissions along the way, which have to be funded somehow, and it’s usually the inflated price which does that. This placed them further behind in terms of equity acquisition.
While you must have expert guidance and input – and gaining some good education and mentor support is a crucial part of the plan – you also have to know how to approach the task of building a property portfolio on your own. You also have to learn how to find the areas and properties which are most likely to do well, despite what’s happening in the overall economy.
Your adviser or mentor can’t be with you every minute of the day. Sooner or later, it’s important to be able to find the areas on your own – and before others do – and make property choices without being shown what to buy, and where to buy it. You won’t be able to do this if you have to constantly ask someone else where to buy or what to buy. Only when you learn how to do your own research, validate what you find, and then interpret the results in terms of what makes good buying, will you begin to experience the kind of success which sets a successful property investor apart.
That’s not to say that you must become an island. I know from experience that success is enhanced when you have the support of the right people, and when you spend some of your time, at least, networking with like-minded people, attending quality events and adding to your knowledge on a regular basis. My company has thousands of clients, many with similar financial circumstances, but all with vastly different success rates with their property investing. They all have access to the same level of knowledge and support, but we have found that those who attend everything we offer, and seek out support on a regular basis, are those who have the most success.
Make the decision today to become as educated about how to buy property as you possibly can, and then commit to a plan which allows you to in some way work upon your property investing strategy every day. By being in what I call the ‘property headspace’ as often as you can, you’ll become a property investment leader with an exceptional portfolio and a secure financial future.