Mar 23, 2022
Do you want to be a successful property investor?
Is so, you'll have to do things differently than most investors.
One way to do that is to treat it like a business.
Today, I'll be discussing this concept in detail with
Australia's leading property tax accountant Ken Raiss, director of
Metropole Wealth Advisory.
I'm sure you'll find his take on things will be a little
different, but you’ll get some great insights to help you move your
property investing up a level.
Build Your Property Investment Business
Property investors start their journey with good intentions
great enthusiasm, but unfortunately, 92% don’t manage to get past
the stage of ever owning one or two investment properties. And less
than 1% of investors build a portfolio of six or more
So, where did they go wrong?
But in most cases, the root of their problem lies in their strategy
– or rather the lack of one.
It never fails to amaze me how many people go into property
investing without any sort of strategy, let alone one that is
specifically crafted to match their personal criteria, goals, time
frame, budget and risk profile.
It’s like starting a new business without a business plan – and
without any idea of what you want to sell, or how.
And if you think about it, property investing is a business
So, how do you treat your properties like a business?
Every property that doesn’t fit your overall strategy
will be the wrong choice.
It’s critical to get some
expert guidance when developing your strategy to ensure you
consider all the important factors relevant to your current
position and long-term wealth creation and lifestyle goals.
What does it mean to treat property as a business?
- All too often people are led into a false sense of security
that a residential property in Australia will grow in value
- But less than 5% of properties are investment grade.
- You must also consider the money you use both from savings and
- In today’s market, you will need to spend $300k even on a less
desirable investment and much more for an investment-grade
- That level of spending should require an understanding of the
economic and market dynamics, a capability to identify the gems,
and an ability to negotiate professionally.
- Most sellers go through a real estate agent who is trained and
practiced at this and performs these functions daily.
- It is not a level playing field. You need to tip the scales
back in your favor by seeking professional help.
- Buying the right property then gives you the best chance to
maximize future capital growth which leads to improved rentals,
equity to use for future purchases, and as part of an exit strategy
to maximize capital gains.
- As a business, you need to consider future and current use,
funding, potential to manufacture equity (as opposed to just
waiting for the market), buying structure, impact on future
lifestyle, and intergenerational wealth transfer.
- This requires a more holistic approach where the various
components of tax, structures asset protection estate planning,
risk, and retirement must be all taken into account under one
Why is asset protection so important?
- Asset protection needs to be considered under three
- You work in a litigious profession such as a surgeon
- You find yourself in a management role where you take on
responsibilities for employees where issues such as occupational,
health, and safety concerns are part of your responsibilities.
- When you are wanting to wind down and live off the fruits of
your hard work you do not want an unfortunate accident to wipe out
your wealth through litigation.
- As a property investor, your risk is higher than normal as your
tenants can sue if they are injured through your carelessness.
- In the case of litigation, you risk the loss of all your assets
which could include the family home.
- There are specific steps we should all take such as not being
in a position to be sued and having adequate insurance, but we all
know this is not always enough.
- Many people are advised to move these assets to a trust if they
feel sufficiently concerned but this triggers CGT and stamp duty
and for the family home the potential loss of the main residence
exemption and land tax exemption. There are strategies to eliminate
these taxes which we at MWA assist our clients with and that is to
implement an Equity Transfer Trust.
- You can also purchase your assets in a more appropriate
structure from the beginning.
Links and Resources:
Raiss- Director Metropole Wealth
Get Ken Raiss
to build you a Strategic Wealth Plan
Get the team at Metropole to help build your
Click here and have a chat with us
Shownotes plus more here: Build a
property investment business you can be proud of with Ken
Some of our favourite quotes from the show:
“If you don’t ask your consultants the right questions,
sometimes they won’t be forthcoming.” – Michael Yardney
“A trust is really just a document, a piece of paper, with lots
of clauses in it. And they’re not all the same.” – Michael Yardney
“It’s critical to buy your assets in the correct structure
upfront.” – Michael
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