Property investing is all about building wealth and financial security. Starting with one property and adding more over time. The ultimate goal for you as an investor is to cement a profitable and solid portfolio that grows wealth faster to fund your lifestyle.
Why is it some investors are flippant with the biggest financial outlay they will ever make?
With big dollars at stake, it’s wise to treat this form of wealth building seriously. From not doing regular maintenance or due diligence on property managers, investors are throwing away thousands of dollars in capital gains and rental income by not treating their portfolio like a business.
There are many lessons property investors can learn from business about how to capitalise on their nest egg.
Think like a business owner
The best type of business everyone wants to buy, yet very few sell, is a business that’s profitable while requiring next to no time in the day-to-day from the owner. The right investment coupled with a great property manager who thinks like a business owner gives you more time and creates another source of disposable income.
Focus on profit
If you had a business that wasn’t profitable, how long would it last? Not long. Yet Australians happily hold on to poor performing properties with property managers who don’t do anything to enhance rental income or sale value. If you’ve got a property manager who just collects rent, but doesn’t focus on your wealth goals, you need to ask yourself – what’s the cost of not changing to a better property manager?
Research
Before businesses hire team members, they do due diligence on prospective staff, asking for references, and do background checks to make sure the person coming on board can do what they say they can. Investors spend a lot of time researching the market but very little time researching the agency looking after their biggest asset. When you go looking a property manager, ask these questions:
- What is your vacancy rate?
- What % of properties under your management have had a rental price increase in the past year?
- What is your strategic plan to increase my rental income and property value for the next 10 years and beyond?
Have a plan
Businesses spend time planning for future growth and invest in resources to build value in their venture. Property investors can emulate this tried and tested business process by working with property agents who invest in planning for their future. A maintenance and growth plan forecasting 10 years at a time for things like renovations that add value, increases the weekly rent and capital value. Turn your vision into a game plan working with a strategic and proactive property agent who starts with the end in mind. This is essential so you are always in the best position to let, release equity or sell for a premium. Your growth plan should encompass clearly defined goals around the property eg: occupancy aims, generating passive income, selling, or developing, and benefiting from tax depreciation.
A team you can count on
Wealth creation doesn’t happen in isolation. Successful businesses ensure they have a team of experts on hand to help with the different areas of business. They engage specialists who help with marketing, finance, admin and sales. You need a great team on your side. After all, these are the people who are going to help your asset grow. From a great accountant to dedicated property manager and leasing managers, access to the Principal, and extended network of referral partners, including tax depreciation specialists, mortgage brokers, and tradies. Having the right people on your team is an investment in the property value’s growth.
By Adam Nobel
About the author
Adam Nobel is an award winning real estate specialist and principal of Hugo Alexander Property Group. With a lifelong love of learning and innovation, he believes close enough is never good enough.