The property investment advisory industry offers a wide range of personalities and marketing styles. Some advisors are self-made success stories that build a business profile based on years of hard-earned experience. There are also “altruistic” types that the investment community really wants to educate about how real estate can prepare you for a comfortable future life. Unfortunately, some opportunists are among the ranks that are motivated primarily by generating commissions and receiving bribes.
I am a member of the Australian Real Estate Investment Expert (PIPA) Board of Directors. This is an organization that strives to regulate these sharks and keep them away from vulnerable investors. Unfortunately, this is a large industry and there is much we can do now. As a result, the responsibility for avoiding fraudsters rests with the investor’s own shoulders. If you have the opportunity to talk to a counselor, I encourage you to consider specific signs that have helped me in the past.
If someone says you’ve found a magical strategy that ensures investor success, it’s a good idea to run away and don’t look back. My own experience is not about investment strategies, but about choosing real estate over individual investors.
Bad path
The process of building a successful real estate portfolio is not the same for all investors, as important statistics on what to invest, where to invest, and expected outcomes vary from individual to individual. If it was so easy to profit from real estate, we would retire in our thirties and bring a private jet to the Maldives.
There are pros and cons to almost all types of investment approaches, depending on where you are on your regular trip. I’ve seen books that create the illusion that by following a unique approach, you can build a huge portfolio with more properties. “Buy only new duplexes”, “Search only unapproved development sites”, “Don’t buy new units”, “Always buy new units” … the list of inconsistencies seems to be endless ..
In fact, most strategies have a mix of strengths and weaknesses in terms of performance, value gains, tax benefits, and development gains. In my opinion, it’s the investor, not the investment, that matters.
Start with a plan
When you start investing in real estate, your initial purchasing guidelines are determined by an honest and fearless assessment of your financial position.
You need to know the number of your available cash flows and how much your bank will lend to you. This is where talented and experienced mortgage brokers really shine.
Sometimes you start in your twenties without dependents and with a modest salary. Investors of this type may need to consider slightly higher returns to pay off their debt, but they have the time and can afford long-term capital gains. They will probably see their salary increase in the future, which will increase their ability to borrow. You would have thought you didn’t have to chase the front lines yet.
What if I start at 30? You may have paid off your mortgage, but it’s not a lot, but it’s enough for an investment deposit. Or you may have rented it for a while and don’t want to move. Maybe investing in rent is part of your plan. You may have a serious relationship, but the finances are not yet in agreement. You may still need good performance, but you can overhaul it a bit. A medium ring house can suit your style.
At the age of 40, salaries begin to look very healthy. As part of your consideration, you can choose a small tax plan and depreciation. Households may have two incomes, but toddlers with tuition fees should be considered. How does this affect your cash flow? Is it possible to do a small development project so that we can make a reasonable profit for future investment? Is the joint venture at stake?
If you are looking at your retirement year, you may want to not only reduce your debt but also earn higher returns to pay for a long-planned trip to Australia. Also, streamlined investments away from rigorous development are very important because you don’t want the high stress of managing your portfolio. At this point, you can also consider blocking your business venture.
Long game
My point is that the idea that a single strategy or property type is the gold standard for success is ridiculous. Adhering to your investment style is reckless and inefficient.
Investing in real estate towards your desired goals is an active pursuit of maintaining your ability to change as your living conditions change while adhering to your plans. Here’s how to seize opportunities and maximize returns … and the variety of your strategies will definitely result.
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