I have a very strict philosophy around Property investing.
Property is a very unforgiving investment if you get it wrong and how many times in your life are you going to make a $500,000, $1,000,000, $2,000,000 investment in one thing? Not many!
After seeing 1,000s of clients and looking at their successes and their failures - it's very clear why some do better than others.
Before you look at investing in Property, please note that the property market is completely unregulated. This means it is buyer beware.
Everyone and anyone can be a property expert and tell you where the best place to invest is without any legal obligation.
Be very careful what book, seminar or course you attend and who's advice you follow. Most have highly conflicted philosophies that push a certain type of property on you and most of the time due to self interest.
You can invest in property based on what you know and not guessing what you don't. Many believe that any property will but sadly for it to be worthwhile, you must own quality.
Please be clear that I personally do not help my clients buy property. My job is to help you think through whether you should do it in the first place and if so help you consider what is the right type of property.
If you need help, I can refer you on to buyers agents that are matched to what they are looking for or they go it alone.
These are my twelve rules that I help my clients understand before they invest in property and what we follow to grow their portfolio smartly.
Growth, Growth, Growth - Investing in property is a very long term investment - ideally 20-30 years at least. I do not believe you should try to invest in Property for short times frames. Therefore only focus on growth. What will drive your return long term is growth. Unless you get growth, it's hard to increase your income (rent).
Right Demand Always Increasing - Demand is your buyers. All property appeals to some buyers but not others. The more buyers the better - singles, couples, young families, older families, upgraders, downsizers, retirees and investors. But what you really want is the right demand - higher income families and cashed up down-sizers most of the time.
Supply Shortage Increasing - There's no point buying property if there's more competition (supply) constantly coming on. You need to buy something that will every year becomes more desirable as they are not building any more.
Quality over Quantity - More property does not mean better. Quality over quantity will always be better. Don't buy in to the nonsense that the amount of properties you own is what matters.
Market Fit - Whatever you are buying has to suit the market. There's no point buying something that doesn't hit what people in that location want. If they need parking, you need parking. If they need light, you need light. Get the right property to fit the market, not fit your budget.
Land Over Buildings - Land is what goes up, buildings go down. Over time, land is what becomes more valuable. Focus on getting high quality land in highly desirable locations. It's not the size but the value of the land that matters.
Old Over New - Newer building fail the land test usually but secondly depreciate extremely fast hence why you get depreciation. Most new buildings, the developer is the one who makes the money and not the person buying it. Be VERY careful with new property, I have very rarely seen it work. That new building won't be so new in five years time.
Something Special - If you own a property, there must be something special about it. If there is not, you will always be pushed to the bottom, not rise to the top. You need to know why you will always be the property everyone would want.
Small Things Matter - It might be the street, the character, the light, the view, the floor-plan, the houses next door, the streetscape, the backyard. These may be small things, but small things make big differences to buyers.
Buy, Add Value, Hold - Great investors buy well, add value smartly and never sell. There are huge advantages to never selling and those that are the most successful never do. Understand how and why you need to keep your property.
Win in down markets - No matter what happens you need to have a property that will ride the storm when it comes. Some property will collapse very quickly, others stay strong in the harshest of climates. How will your property perform when things get tough matters.
Not Investing is Investing - Most investors will have the option to invest more but the ones who say no just as much as yes. You may have the means to invest, but not enough to do it the right way. Just investing for the sake of investing is the biggest mistake many investors make.