All About Property

Many people do not consider investing in property, because they think that it is too risky, too hard, too complicated and many other reasons. The fact is this; it is easy, it is not complicated and what’s more, anyone can do it. All you need is the right information, a good strategy and a good mentor.

So here are a few helpful suggestions for you:

1. Why are you buying?

This might sound like a stupid question, but you need to think this through, because it has a major bearing on what you buy, where you buy, what name you buy it in and a few other factors.

I’ve found that while most property investors hope to one day replace their personal exertion income with cash from their investment properties, most don’t have a strategy to achieve their goal.

2. What to buy?

First thing to do is to work out what type of property you will need for your situation. This will depend on many factors; your reason, your price-point, your purpose and length of time etc.

Do you buy new or old. House or unit or townhouse or an apartment. Commercial property or retail property or Industrial property? This does depend on many factors.

If you are not sure, please give me a call or email me and we can analyse this very quickly and I can assist you with getting the right one.

3. Where to buy?

Do not look for ‘hot spots.’ If you do you are dicing with danger for the simple reason that today’s hotspot might be tomorrows cold spot. Do your research around where you live and get to know the area. There is nothing better than being able to drive past your investment property on a regular basis, just to see how it is doing.

If it is too expensive around where you live, then look for the areas that the government has designated as Regional Centres where money for new infrastructure is being spent and it is well serviced by transport, shops and schools.

I am not a great fan of buying in regional centres. History has shown that the capital growth of city based properties does exceed regional properties and although regional might give you a better rental return, when you add in the capital gain, city based properties win every time. And if you have to sell for any reason, they sell quicker in Melbourne.

As far as deciding where to buy; this is easy. ABS figures show that Melbourne recorded the biggest population growth rate of any capital city in Australia last financial year, with its population increasing by 2.1 per cent. Why would you not invest in Melbourne, when it is going to be the largest city in the country.

4. Do not buy to negatively gear. I hear this so often that people want to buy an investment property, because they want a tax deduction. This is not a reason; it is just a very useful by-product of investing in a property and not the aim. Unless you are on a big wage it is not a reason.

That said, property does allow you many tax advantages, especially depreciation, but you do not buy it for that reason. You buy it to suit your plan for creating wealth and you choose the property accordingly.

5. What entity do you buy the property in? Your name? A Family Trust? A company? This might seem a difficult question, but once you know what the end game is, it is easy as picking up the phone and asking a good accountant and lawyer.

Or I can point you in the right direction, as I have a good team assisting me.

6. So just how many properties does it take to enable you to quit your day job and live comfortably?

This is a very interesting question and it depends vey much on what you want as an income when you quit working.

The sad fact is most people think they can retire on the pension and what they find is that they have to drop their standard of living quite considerably to manage. Is this what you want for yourself? I should think not!

From my research it appears that a minimum of around $80,000 per annum is what is required to live comfortably as long as you do have no debts to pay.

So do the maths. Let’s assume an interest rate of 3.5% paid on your savings. To achieve $80k per annum you will need $2,300,000 saved. That is after you have paid off your house. And then you have to keep pace with inflation. How does that sound? Does it make you stop and think? I hope so.

The fact is that property returns at least 3.5% per annum, so if you had three debt free properties to the value of around $1M each you would achieve that and what is great is that they keep pace with inflation. Just think about this; had you bought ten years ago you would have only paid $500,000 for each of them.

So I ask you this; would you like to start NOW! As they say; ‘better late than never.’

I came across Tom Corley on YouTube with his video called:

‘225-Rich Habits and Raising Rich Kids-The Daily Success Habits of Wealthy Individuals.’

I will give you the link to that video at the end of this particular blog-post.

I am not an advocate of becoming RICH, although I have nothing against it. I am an advocate of not relying on a pension and having a comfortable lifestyle, when you stop working.

So why (here it comes again) do 85% of Australians retire on less than $35,000 pa?

It really is quite simple; people do not take responsibility for growing their wealth.

Some expect the Government to help them, some think their Superannuation will do it, (which mostly it won’t), and many rely on advisers who look after their own pockets instead of their client’s best interests.

So I will say it again; “What steps are you taking, to retire comfortably?”

It is never too late or never too early to start, but at the end of the day you must ‘start.’

So to begin, here are 20 observations from Tom about the wealthy and the not so wealthy.

Tom Corley, author of the book Rich Habits suggests the rich do things very differently from the average person.

While clearly this is no judgement of the people, here’s a list of the differences between the habits of the rich and the poor:

• 70% of wealthy eat less than 300 junk food calories per day. 97% of poor people eat more than 300 junk food calories per day. 23% of wealthy gamble. 52% of poor people gamble
• 80% of wealthy are focused on accomplishing some single goal. Only 12% of the poor do this
• 76% of wealthy exercise aerobically 4 days a week. 23% of poor do this
• 63% of wealthy listen to audio books during commute to work vs. 5% for poor people
• 81% of wealthy maintain a to-do list vs. 19% for poor
• 63% of wealthy parents make their children read 2 or more non-fiction books a month vs. 3% for poor
• 70% of wealthy parents make their children volunteer 10 hours or more a month vs. 3% for poor
• 80% of wealthy make hbd calls vs. 11% of poor
• 67% of wealthy write down their goals vs. 17% for poor
• 88% of wealthy read 30 minutes or more each day for education or career reasons vs 2% for poor
• 6% of wealthy say what’s on their mind vs. 69% for poor.
• 79% of wealthy network 5 hours or more each month vs. 16% for poor.
• 67% of wealthy watch 1 hour or less of TV every day vs. 23% for poor
• 6% of wealthy watch reality TV vs. 78% for poor
• 44% of wealthy wake up 3 hours before work starts vs.3% for poor
• 74% of wealthy teach good daily success habits to their children vs. 1% for poor
• 84% of wealthy believe good habits create opportunity luck vs. 4% for poor
• 76% of wealthy believe bad habits create detrimental luck vs. 9% for poor
• 86% of wealthy believe in life-long educational self-improvement vs. 5% for poor
• 86% of wealthy love to read vs. 26% for poor.

My next tip would be to get your mindset right. As the saying goes;

“What the mind can conceive and believe it can achieve.”

I have said before that it is my mission to serve my people, so please feel free to drop me an email and depending on where you are on this journey, I will be happy to suggest where to start.

Her is the link to Tom’s video on YouTube:

Click

https://youtu.be/-iT5DqSJTVc

The more I traverse the area of wealth creation through property the more I keep coming up with the same issues. What should normally be a simple concept can become very hard to do.

Any number of things can get in our way when we’re trying to get financially free, however many of them fall under the category of being self-inflicted. So if you can look at these barriers and conquer them, you should be well on the way to creating wealth through property.

So let’s look at them one by one:

Mindset

The sad part of this is that it is all in your own mind and as a consequence could easily be changed, but you might have years of negative programming that stops you.

Consider this; we are not educated to become wealthy. You might be lucky to have a parent or relative that educated you differently, but by and large we are not programmed to create wealth. If we were why would 87% of our population retire on less than $35,000 per annum.

It might sound ever so simple, but all you have to do is to decide that you want to retire comfortably and by todays standards that is supposed to be over $60,000 p.a. Once you have made this decision you can move onto the next issue.

Become comfortable with debt

I wrote about the concept of O.P.S.M. before and that is using Other Peoples Safe Money to create wealth and by that I mean borrowing money at today’s interest rates (say 4%) and investing it at a better return than the repayments (say 8%). If you think that 4% is not a good return have a look at the dividends that many public companies give you on your shares and consider that you cannot leverage shares like you can property. So you are well in front and furthermore property doubles every seven to ten years (in Melbourne).

For instance, Donald Trump has made a fortune using other people’s money!

I’m sure he is extremely comfortable with debt.

Time Management

Like most people would-be property investors have a job and other obligations that take up a lot of their time and many of them try to do everything themselves, instead of leveraging the knowledge and/or services of professionals who have been where they are and they end up worn out and exhausted. I’ve seen it time and again.

People are excited about the wealth creation possibilities through property investing. They pick up every property investing magazine, join clubs, hang out on forums, etc., forgetting that they have other things in their life that require attention too. And while these things are great, if you don’t have a balance you burn out and give up, with another failed attempt at finding financial freedom. There is an easier way and that is to ask for help and assistance.

Lack of Market Knowledge

I make it my business to follow the property investment market and have access to plenty of information and I often hear “gloom and doom” merchants in the market place, with a vested interest in selling you something.

Are these people right? Perhaps on the odd occasion, but more often they’re not, they’re just repeating what they’ve been told.

If you have no real idea of what to look for you’re simply taking a stab in the dark when you buy an investment property and yet that can still work for you. But knowing and understanding the key market drivers is more helpful to successfully invest in property or all you have to do is ask.

In summary let me give my favourite diagram:

1.Get your mindset right

2. Get the right information

3. Create the right strategy

4. Take the right action

It really is simple and if you do not know how all you have to do is ask!