10 Critical Questions All Property Investors Should Ask Themselves with Brett Warren
Mar 22, 2021
As we move into a new property cycle, a whole new generation of people are going to become financially independent through property.
So, today’s show is going to be dedicated to helping you become one of those. I’ve got two segments for you today.
The first segment is a chat with Brett Warrant about 10 questions you should ask yourself when you’re going to buy an investment property – whether you’re a beginner or an experienced investor.
Then, in my next segment, I’m going to share five things that
you can do today to become more successful tomorrow.
10 things to consider when buying an investment
property
With our housing markets entering a new cycle - a new phase of strong growth - there are more people interested in getting into property investment.
Close to 50% of investors who buy a property sell up in the first five years and 92% never get past the first or second property.
In fact there around 1.9 million Australian investors never get past the first or second property and less than 21,000 Australian investors only six or more properties
So how do you succeed, how do you get into that small group of investors who build a substantial property portfolio?
Currently, there are so many options out there. Everyone seems to have become a property expert with an opinion of how to create wealth through property.
And, I don't know if you've noticed - many of their suggestions are conflicting.
So whether you’re a beginning property investor or an experienced investor, I’d like to help you take advantage of this new property cycle by discussing 10 questions that I believe all investors need to get their head around with Brett Warren, National Director of Metropole Properties, and my business partner who is based in Brisbane.
- What do I want to achieve?
Is it money? Wealth? Financial freedom? Maybe all of the above!
Remember the bricks and mortar are not really the end goal; rather they’re just the vehicle you choose to get there.
So firstly, identify your end goal and then formulate a plan to get you there in a time frame that works for you.
Unfortunately, most investors don’t have a plan and that’s why they get lost along the way or get distracted by the latest investment fad or the next “hot spot.”
And if they do have a plan, I've found they rarely review it to make sure they’re on track.
Maybe you don’t know what the future will hold – but you do know you need a substantial asset base.
- What is my preferred strategy?
Once you know where you are going, you need to implement an investment strategy that helps you get there.
Since you can’t save your way to wealth, my goal is to build a substantial asset base through capital growth.
- Where should I buy?
Location is critical to the long-term performance of your investment.
I look for suburbs that have always outperformed the averages or one’s going through gentrification.
These are generally lifestyle suburbs in major capital cities close to the CBD, amenities, or the water.
And the significance of the neighbourhood has only become more important. In urban planning circles, it’s a concept known as the 20-minute neighbourhood.
- What type of property?
This will depend upon your budget and while, in general, houses deliver stronger capital growth than apartments, this has a lot to do with the location of your property.
I'd rather own a villa unit, townhouse, or apartment in a great neighborhood in an inner or middle ring suburb than a house out in the sticks
Today more people are trading their backyards for courtyards and balconies to be situated in the right locations.
6 Stranded Strategic Approach – only buy a property:
- That would appeal to owner-occupiers.
Not that I plan to sell the property, but because owner-occupiers will buy similar properties pushing up local real estate values. This will be particularly important in the future as the percentage of investors in the market is likely to diminish. - Below intrinsic value – that’s why I’d avoid new and off-the-plan properties which come at a premium price.
- With a high land to asset ratio – that doesn’t necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.
- In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area including gentrifying areas.
- With a twist – something unique, or special, different or scarce about the property, and finally;
- Where they can manufacture capital growth through refurbishment, renovations, or redevelopment rather than waiting for the market to do the heavy lifting as we’re heading into a period of lower capital growth.
- Should I buy something old or new?
More often than not, new or off-the-plan apartments are a “box” in a high-rise monolith.
The problem here is that you pay a premium to the developer and miss out on the first decade or so of capital growth.
At the same time, the majority of owners in the building are likely to be investors. I prefer buying where owner-occupiers, who look after the building better, predominate.
This gives you the potential to not only increase your rental income but also “manufacture" some capital growth.
- When should I buy?
There's no sense in trying to time the market, even the experts can't get it right.
Instead, the right time to buy your next investment property or home is when you're in the financial position to do so.
- What can I afford?
Before you start looking at what to buy, you need to know what you can afford to buy.
Get a loan pre-approved and make sure you’ve set some funds aside for acquisition costs, holding costs, and a financial buffer for a rainy day or rising interest rates.
Michael:
- Your budget – that determined by the bank
- Location – we are not prepared to compromise on that
- The type of property in the location
- How will I set up my purchase?
It’s important to own your investment property in an entity that protects your assets and legally minimizes your tax.
Whether you buy in your own name, your super fund, or a trust, you need to be aware of what it will mean for you and your family, now and in the future.
That's why it's important to get independent finance and structuring advice before you buy your property.
- Who should I ask for help?
If you are the smartest person in the room, you are in the wrong room!
The real estate game is a team sport, requiring expert input and advice from a qualified accountant, a smart solicitor, a finance broker, an independent property strategist, and a mentor who will help set you up for a win.
In other words, to secure your financial future you’ll need much more than just a buyer’s agent or a property strategist.
- Should I take advice from my friends and family?
In general, the answer is - no!
Not unless they're a particularly smart investor having invested successfully through a number of property cycles.
This is because “the crowd” is usually wrong.
As our real estate markets pick up and the cycle moves on, a whole new generation of investors will enjoy the prosperity property can bring.
If you ask the right questions you could be one of them.
5 things you can do today to become more successful tomorrow
You know what so interesting about success?
When I look at people around me who are ultra-successful—I mean, whether it’s in their business, their investments, with money or in their physical health or maybe it’s in their relationships —it’s not that they’re any smarter.
It’s not that they’re any more talented. They weren’t born with something special.
Instead, they simply have a different mindset.
They think differently and you’ve heard me say it before – your thoughts lead to your feelings; your feelings lead to your actions and your actions lead to your results.
For these successful people, their outside world – the results you see - is a reflection of their inside world – the way they think.
Here are five ways you can think differently to help make you more successful.
- The average person thinks “I can’t”. Successful people think “How do I?”
Currently, many people are saying, “I can’t afford to get into the property market – it’s too expensive.”
Yet a small group of people is asking a better question “How can I get into the property market?” and by doing that they spend less than they earn, save a deposit, educate themselves to become financially fluent, or take advantage of first homeowner grants or the 5% first home buyers scheme.
- The average person thinks “I want to”. Successful people think “I will”.
In Star Wars Yoda famously said: “Do. Or do not. There is no try.”
There is a massive difference between desire and commitment.
And that’s why if you want to become successful, an important mindset shift is moving from “I want to do it” to “I will do it.”
- The average person thinks “It’s not my fault.” Successful people think “It’s my responsibility.”
There is no such thing as a victim.
Yet when things go wrong, most people love to say, “It’s not my fault.”
In contrast, successful people take responsibility.
Fact is, it doesn’t matter whose fault something is. Successful people take ownership and responsibility for everything in their life.
- The average person thinks “I got lucky.” Successful people think “I created my own luck.”
A lot of people think that rich people are just lucky. Successful people are lucky. Great athletes are lucky.
But talk to any of those rich people, those successful people, or the great athletes and you’ll find out it’s not luck.
Sure, we occasionally get random good luck or bad luck, like winning the lottery or receiving an inheritance.
However, the rich and successful people manufacture their own luck – they’re in the business of creating luck.
They do certain things every day that creates the opportunity for good luck to occur in their lives.
- The average person thinks “It happened.” Successful people think “I made that happen.”
A lot of people think that everything in their life just happened by accident.
On the other hand, successful people realize that nothing happens.
They understand the principle of cause and effect.
They realize they are creating their future every day by the things that they do today.
Just like you have created what’s happening to you today by things you did quite some time ago.
For example, you are reading this blog today because a while ago you were interested in more success or money or property investment and you subscribed to my blog.
Everything that happens is a result of something else.
But the good news is, you can change your future by changing your way of thinking today and changing your actions today.
So, if you’re unhappy with any part of your life, realize that you are where you are today because of all the things you’ve chosen to do, and the things you’ve chosen not to do.
Now, rather than taking this as a negative, look at the positive side.
So, the lesson from this is to stop treating your life like everything just happens. Start creating a new future by thinking differently and developing good habits.
What’s the quickest way to do this?
There is a shortcut, get a good mentor who can see your blind spots and who can teach you different ways of thinking.
By the way that’s exactly what happens to those people who join us at Wealth Retreat each year.
Join me for five transformative days on the Gold Coast from June 12th to 16th and get the one-on-one private mentorship you need to achieve your most ambitious goals and dreams.
Not just in property, but in business and in life in general, because the aim of Wealth Retreat is to create Lifetime Wealth and leave a legacy.
When you join us you will get:
- Mentorship- You’ll have the opportunity to interact one-on-one with me and our guest experts so we can help you gain deeper insight and achieve your specific goals in property, business, and life.
- Masterminding- You’ll spend several hours a day brainstorming and getting ideas, advice, and solutions to your challenges from a hand-picked group of high-achievers.
- Networking- You’ll have plenty of time to build relationships with the other participants during breaks, at meals, and at night, so you can connect on a deeper level and benefit from their input and expertise.
- Fun– the days will be very full, but at night we’ve got some surprises for you.
And if you would like to get the highest possible level of support for your most ambitious life and business goals, I encourage you to join me there!
You can learn more about this life-changing retreat here.
Don't count yourself out...
When you surround yourself with such motivated, energized, spiritually charged people, you tap into the power of the group and become more energized and powerful yourself.
There’s no limit to what you can accomplish with the support and encouragement of such incredible people!
Please note that to ensure the best possible experience, Wealth Retreat is limited to a small number of participants only.
Learn more and register your interest today.
I look forward to helping you perfect the life of your dreams!
Links and Resources:
Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us
Brett Warren – Director of Metropole Property Strategists
Learn more about Wealth Retreat here
Shownotes plus more here: 10 Critical Questions All Property Investors Should Ask Themselves with Brett Warren
Some of our favourite quotes from the show:
“You’ve got to know what the end game is, and it’s different for everybody and it depends how long your journey is.” – Michael Yardney
“My preferred strategy is to invest for capital growth.” –Michael Yardney
“The answer is not just to convince the logical side of your mind that you’re going to do something, but you also need to work on the unconscious part of your mind. The emotional side.” –Michael Yardney
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