Today we are going to cover 2 factors you should understand before progressing with your property investing. Today, we are covering:
This is a video from the Property Formula Workshop. There are several unlocked for you and included in this course. To get access to all videos and spreadsheet calculators please apply for the workshop.
Contrary to popular belief you do not need a high income or lots of money to get going with property investment (obviously it helps but there are ways around it). If you have the knowledge you can pull other investors into your circle and do some deals together. It’s very common to partner with other investors.
If your capacity to borrow more for another property is not great, what can you offer those with equity and capacity? Your time, skills, and eye for a deal, may get you a good investment opportunity through a partnership. Or you can line up a good deal for someone else and take a payment along the way. It’s not as complicated as you may think.
Last year 2 of our clients partnered to buy a property in Hawkes Bay in a 50/50 partnership. The net yield is over 8% and neither of them has visited the property since buying it because everything is managed by a local manager who is paid a premium as the clients wanted a rent guarantee. Simple stuff. They did the due diligence together, with both feeling more confident to do the deal because the risk was halved.
Before you get into property investment strategies like flipping, trading, double settlements, wholesaling, you have to do the work and have the team behind you backing up your knowledge. This is so that anyone else coming along in the investment with you has the confidence to support your plan as they see you know what you are doing.
Again I have to say – let the numbers be your guide.
We are happy to share how to figure out your borrowing power and build you some personalised spreadsheets, we just need you to complete an online profile. Or for instant online answers complete the 90-second Mortgage Snapshot.
If you are honest with yourself about the time (and motivation) you have available for property investing, and your capacity for further borrowing/investing on your own, you can make a quick assessment of your options as they are now. Then make plans to get to where you want/need to be.
Start by making the commitment to yourself (and your partner) to grow your knowledge to where it needs to be to keep investing and make the time commitment to do the research.
With life as it is these days, constant distractions with social media, Netflix and all the fun things in life – it can be easy to say “I don’t have time for this stuff”.
You have to make time. You will probably have to sacrifice a few things in the short term, to make time to build towards your wealth and eventually financial freedom. Some of these sacrifices may be really painful like missing time with friends or skipping meals or workouts to make the time.
A daily habit of; reviewing new listings that hit your inbox, listening to podcasts about property investing, and talking to friends about property investing, is a simple and quick adjustment to make.
If your friends are not focused on wealth building, think about finding some new contacts or friends that are – it’s very hard to hit a goal like this without help and encouragement from others.
If your partner just wants to buy lots of nice things and travel a lot – property investing might be super frustrating for you as your expenses and lack of savings prevent you from taking the next steps.
Negotiate with your partner and create a shared vision. The Barefoot Investor is a good grounding book to start with. You can work with www.whq.co.nz as well.
If your life is too busy for investing (or you are not yet committed) then focus on simpler and automated investing like Sharesies and Simplicity Investment Funds.
When I started my business, I did not stop playing rugby or going out with friends. Only when I said ‘Enough! I am not reaching my goals…’ did I give up rugby and scale back my social life to MAKE more time to grow my business and build up the client base.
During that same time, I was acquainted with my partner and we’ve since had kids. My vision for life was shared and we work on things together. If I had not focused on what was important I would probably not have settled down and grown the business I wanted. I would have missed the important things because I was too busy. Find the pivot point and double down on what really matters to you. Think long term.
This had the double benefit of spending less money and creating more time. This helped with my capacity for investing in business and property. I wrote myself a letter – here is a snippet –
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If you’re committed to property investment… every problem you face is just a challenge to be figured out and overcome. A game where the task is solvable, with focus. Isn’t it super satisfying when you are playing a game and you finally beat the big boss or win a hard level – just 100x that feeling to understand what you will feel when you make money property investing.
This supercritical view of myself is not easy to admit. Not many people are freely going to admit it’s their own fault for not hitting their wealth generation goals. I’ve got ambition. I want 10 properties by the time I am 40 (5 years to go).
My circumstances do not matter to you. Your goals will be specific to your situation and we will talk about passive income later in the course.
The thing I can pretty much guarantee… without commitment and some sacrifice, you will not achieve your goals. Even people on massive salaries (some of our clients earn $500k+ a year) still fail to set up a passive income for when they retire as their focus is not centred on creating generational wealth… they spend what they earn.
If your mindset is that of an investor, you will overcome challenges thrown at you and be focused on the long term.
Working with a mortgage adviser will help you figure out what gaps in knowledge you have and where you can focus most of your time and effort in the short term – to achieve dramatic results in the long term. A mortgage adviser will listen to your goals and help you form them into a realistic game plan.
P.S. Tomorrow we are going to deep dive in how to avoid failure in property investing and how to dodge the common mistakes. The ‘game’ that is wealth building is not fun if you make bad bets or lose money along the way.