Every day I meet people looking to invest in property. Of course, what they all have in common is an interest in the property market but their drivers for coming to see me are different. Some are very savvy about property but time poor. Some know and accept they have very little knowledge about property and engage us for risk mitigation. Some are repeat clients who know the process and are now onto their third or fourth investment. And many are simply curious about the process and are looking for guidance.
People are different. Markets are different. Lifestyles are different.
My job is like a puzzle. There are a bunch of pieces that represent the client themselves – their background, lifestyle, financial position, personality. Then there are more pieces that represent the goals of my client – what do they want to achieve? And then there is a big pile of pieces that represents the market – type of investment, neighbourhood, dwelling, economy, legislation, regulation, data, interest rates, taxes and duties, trend analysis…I could go on.
Solving the puzzle is the investment strategy. At the end, there is a clear picture of the type of property we target for investment.
Before you start your investment journey, here are a few universal factors that are absolutely essential for you to solve your own property puzzle.
1. Make time
Too busy? If it’s in focus, it will get done. Like planning a holiday, you need to allocate some time to research where you’re going to make sure you get the best outcome. If you had an important business or personal deadline, you would do everything you could to make it happen. Think of your personal financial goals as something that’s as important as your health or work and invest some time into learning and understanding the principles of property performance.
2. Get reading
Read, Read, Read. Make sure you identify your knowledge gaps – this is a common blind spot – and fill them with solid research. I usually spend at least three to four hours a week reading articles, market commentary, speaking with agents and assessing key data of certain areas I’m monitoring.
3. Ask the right questions to the right people
Asking the ‘right’ questions is critical. The quality of the questions you ask shapes the quality of the intelligence you gather.
So many people ask: “What will the performance of area ‘A’ be?”
Naturally, your answer will vary depending on whom you ask. If that person has a vested interest, they will tell you a great figure. A better alternative is getting on the ground and speaking with the local school. Ask them what their ranking is. Do they have funding for improvements? Talk to the local agent and ask: what properties are you seeing greatest demand in right now? What demographic type are the buyers? Where are they moving from? Get inquisitive. Get to open homes. Gauge the interest. Speak with council, see what their local strategy is for growing employment in the region or if there are any rezoning plans under discussion.
4. Know where to invest
In Australia, we are blessed with an aggressively rising population, tight vacancy rates and many market segments you can tap into. Right now, we are seeing strong growth and yields on the middle ring of Brisbane. Freestanding houses in high ranking school zones are increasing in value and renting with ease.
In Melbourne, single level villa units close to ‘High street’ type shopping strips and walking distance from train stations get solid rental returns. These are the types of properties developers just aren’t building so scarcity factors play an important part. Supply demand drives the market.
5. Get advice
There are so many ways to invest and many options to consider. Keep in mind they all work if executed correctly. But the most important thing is to get sound financial advice before you get started.
It baffles me that so many clients I meet with don’t have a financial planner. I am lucky to have been around some smart and trustworthy people in the early days who encouraged me to get a good adviser on my team. Knowing what capacity I had to invest and ensuring my money was working as hard as possible for me was critical to giving me the confidence I needed in the early years to invest.
Start your journey this weekend, whether it’s building on what you already know or starting with your first piece of the puzzle. Sure, buying four to five years ago in area ‘A’ would have been great, but that’s the equivalent of wishing to be taller.
No decision has a guaranteed return, ever. But if you do the work, you’ll be in a much better position to tackle your own property puzzle and identify a solid performing investment.