7 Habits Of Highly Successful Property Investors
To become successful Investing in Property I suggest you adopt traits from The 7 Habits of Highly Successful Property Investors
On my wealth-building and property investing journey I have observed what habits make up a successful property investor. What it is that they do that enables them to build wealth and what are the basic principles that make them so successful?
Following the path of successful investors is a simple formula for success.
Here are some things mentors and I have observed from other property investors that may help you on your wealth-building journey going forward.
HABIT ONE – THEY HAVE A DIFFERENT MINDSET THAN MOST OTHER PEOPLE
Successful property investors understand there is good debt and there is bad debt. They know how to leverage investment debt to create wealth. They also know how to manage debt correctly.
They do not over commit financially. They know their property investing numbers inside their property before they commit. Knowing their cash flow and affordability is key. They understand their costs upfront and affordability long term. They are never put in a position to have to sell a property if something in their life goes wrong.
They have a team of advisors around them and they de-risk things in advance such as insurance for income protection, life cover, and landlords insurance. They also establish cash buffers with banks to protect their cash flows and that is something we teach with my finance brokers. These investors treat their property investment like a business and they have specialist advisors to guide them.
Investor Tip: Don’t go it alone! Build your team of expert advisors!
HABIT TWO – THEY STUDY PROPERTY AND FINANCE AND INVEST IN THEIR OWN LEARNING
Successful property investors are constantly reinvesting in themselves by attending seminars, reading property publications and reading property websites.
They go out of their way to read and study property and wealth. Having successful mentors and advisors on their wealth-building journey is a key to their success.
Knowledge is power. Be prepared to pay for knowledge and fast track your success.
HABIT THREE – THEY USE A TEAM OF PROFESSIONALS
All the successful Property Investing people that I know use the professionals around them. They use professionals to provide them guidance and advice in each specialist field.
They understand that the accountant can assist with income tax and structure establishments. For example, whose name should you buy this property be purchased in? What are your expected budget and cash flow? Critical things to know before you invest in property. I have seen countless people who have invested and did it in the wrong way.
They have a sharp finance broker (who understands property investing as a wealth tool) who will assist them with obtaining the best finance to purchase the property, and an ongoing ability to draw equity if required. It’s not always the best interest rate that is important. The type of loans you obtain and how they are structured can propel you forward or set you back on your wealth-building journey.
They build great relationships with their property advisor to assist them with purchasing the right investment property in the right area for the right price without any emotion.
They use a property management agent for the ongoing management of the property.
They use lawyers to assist with conveyancing and estate planning issues if required.
These people are key to their success. Pay people with the knowledge that you don’t have and it pays dividends in the long run.
My TEAM has all of the above-trusted advisors so our clients get the best one on one expert advice when looking to invest. Our TEAM of trusted advisors are all investors. We walk our talk and we do what we teach.
HABIT FOUR- THEY UNDERSTAND THE VALUE OF LEVERAGE AND TIME IN THE MARKET
Successful property investors understand that to increase their asset base they must borrow the money and manage their cash flow (This is known as leverage by the rich!).
They do this without putting themselves under undue stress and they always have a cash buffer in place in the event of an emergency.
They know that property investing in Melbourne, for example, is a long-term investment and cyclic. They don’t panic if things change and they know history has shown capital growth will occur over the long-term.
They understand that the return on property investment is not just the rental, the main goal is capital growth. They don’t just invest for tax purposes either, the main game is capital growth. They know their long term goals and reasons for investing and are prepared to stay in for the long haul. They know there is no get rich quick in a property.
They know that if they have purchased correctly then the key is, time in the market. In other words, the ability to spend more time in the market reduces the risk because of capital growth.
Being patient and planning ahead is a key platform for their wealth-building journey.
HABIT FIVE – THEY KNOW THE MARKETS
Successful property investors do their research and seek external assistance before buying a property to ensure they invest in the right areas.
They stick to a basic formula based on infrastructure, government, and private investment, jobs, location to schools, shops, cafes, and transport criteria. They know what areas are the most likely to achieve growth within a city or suburb and they know what the demographics of particular cities & suburbs are doing at any given time. For example, when they are property investing in Melbourne they access key data on locations and property types and gather information from key people before making decisions.
They often seek assistance from a professional property advisor (not usually a real estate agent either as most of them have never invested before) who know capital growth trends, supply & demand, vacancy rates, rental yields and potential plans for the area. For them, it’s a business decision plain and simple, and all about returns. Due diligence is the key to property selection.
My TEAM is not only property advisors we also work in and assist developers with investment property analysis and demographic information.
HABIT SIX – THEY UNDERSTAND THE EFFECT OF TAX AND CASH-FLOW, DEPRECIATION AND NEGATIVE GEARING
They leverage their tax accountant to manage taxation and cash-flow around their investments. Better known as a Property Investment Analysis. This tool gives them the breakdown of how a property works financially (how the numbers work) and allows them to prepare for the next investment purchase.
They understand how negative gearing works and the significant positive impact that depreciation of their properties, buildings, fixtures, and fittings has on their cash flow, which in turn may influence the style of property they invest in.
HABIT SEVEN – THEY LOOK FOR WAYS TO ADD VALUE
Because the successful property investor treats this as a business they are always looking at ways of maximizing their return on investment.
They recognize that by investing an amount of money into renovating could generate instant capital value increases. They are also aware of not overcapitalising in this area and do relevant due diligence before commencing to maximize their returns. This is a specialist field and you need to have specialist knowledge and advice in this arena.
People love investing in property in Australia but not everyone is successful. The easiest path to take is to learn from successful investors and follow their strategies. They’re time tested and proven to work, allowing you to increase your chances of being successful.
There is no secret formula or get rich quick strategy, it’s doing the basics and doing them well. Build your team of professionals around you.
Above all take some form of action today, not tomorrow, TODAY, right NOW.
Ready to take the next step?