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How to prosper in 2017: 17 tips to become a better property investor

Sunday, January 01, 2017


Fun fact, the month of January is named after the Roman god Janus.  Janus had two faces - one looking backward, and the other looking forward.  The ancient Romans imagined that on the 31st of December each year, Janus looked simultaneously backward to the year that was, and forward to the year that would be.  And thus became the tradition of the new year's resolution when every January, we reflect on past failings and resolve on a better future.  

But how many Januaries have you spent promising to sort out your finances and start investing only to find yourself back to square one come 31st December - dissatisfied with your bank balance and uncertain about your future?  Seeing that January is the time for reflection and reset, we have 17 tips to help you create a more prosperous 2017 and beyond.  In no particular order: 

Tip 1: Don’t bother with new year’s resolutions

As well intending as new year’s resolutions are, more often than not, they turn out to be nothing more than post-holiday whims. Investors who join APIA in January are 57% more likely to let their membership and investment efforts lapse at the end of the year than those who join at any other times of the year. Temporary motivation does not lead to permanent change. If you want to start investing in 2017 then do it because you have made a commitment to become financially independent, not because it happens to be January.

Tip 2: Invest for a purpose

A booming market is a breeding ground for FOMO investors - those who invest purely because they do not want to miss out on the perceived gains being made by other investors right now. Sure, a quick buck could be made if Lady Luck is on their side but not long term wealth. Building wealth with property is a long term endeavour.  You will be spending many years making many hard decisions and sacrifices for that ultimate tangible reward. Without a clear purpose serving as your motivator over time, you could easily become frustrated, lost sight of your goals, give up altogether.

Tip 3: Set up clear goals

Wishy-washy goals never get anyone anywhere.  Say for example you are investing to become financially independent.  Because why not?  FI is the buzz phrase in this industry and the ultimate prize that keeps most of us going.  But what does financial independence mean to you?  How much cash flow per year is that?  How much time have you given yourself to get there?  Which outgoings can you trim to get to FI sooner?  Goals can only make progressive and constructive changes to your life if they are trackable and quantifiable.   

Tip 4: Embrace the dull

Property investment is not sexy.  Sexy is for speculators, not investors.  A successful investor stays faithful to a system and gets himself in a routine of regular action and improvements. 

Once you have a clear purpose and goals in sight, you will be in a good position to commit to an investment strategy and create a workable business system.  Then it is a matter of staying disciplined and patient and keeping an eye out for new opportunities to grow.  Sounds boring?  The good news is that this is a sure-fire way to get you to your financial goals sooner to pursue all the excitements in life you desire! 

Related article: How to choose the right investment strategy for you

Tip 5: Get an accountability partner

Dr. Robert Cialdini, a social psychologist, turns peer pressure on its head and gives it a positive spin. His studies show that peer pressure is powerful, especially when we make complex or ambiguous decisions and that the closer we are to the person (group) we compare ourselves to, the more likely we are to be influenced by them.  Peer pressure is largely the reason why exercise buddies and gym classes work.  By the same token, accountability partnership can work wonders for investors and it needn't be a complicated process.  This is what a simple version looks like: 

  1. Get together with someone you can trust and collaborate with; 
  2. Share your goals with your AP; 
  3. Set up and commit to a regular check-in schedule to update your APIA on any progress made or setbacks suffered; 
  4. Regularly push each other to evaluate the relevancy and efficacy of their goals.  

While some people respond favourably to the hierarchical nature of a traditional mentorship, studies have consistently shown that, as social animals, we are more susceptible to peer-based relationships especially with those whom we share common values.  

Tip 6: Stay engaged

You do not invest in a vacuum.  Evolving laws and regulations will always impact on the way you invest.  As a long term investor, it is in your interest to stay engaged in the industry, be knowledgeable of developing policies and, as much as possible, take part in public consultations.  One of the advantages of being an APIA member is that we make relevant information readily available to you through multiple channels and on various platforms.  After that, we encourage you to sound out and take part because oftentimes the price of apathy is too much to bear.  

Related story: NZS8510 - What property owners need to know about meth decontamination and detection standards for now (public submission closes 20th February 2017)

Tip 7: Learn the difference between good debt and bad debt 

Contrary to popular belief, property is not so much tax-advantaged as it is leverage-advantaged.  Many would-be investors are very uncomfortable with the concept of debt because we are brought up to believe that all debts are bad.  When you invest in property, you are benefiting from the idea of good debt i.e. the loans that help you acquire and grown an asset in value over time as to deliver growth and cash flow.  To become a good investor, not only do you need to know the differences between good debt and bad debt, you should also find a way to seek out/negotiate better debts to serve your investment purpose.  

Tip 8: Get good tax advice 

You can scrimp and save on many things but never good tax advice.  Having a solid tax strategy from the word go will not only help you stay in profit but also out of trouble.  It is not enough to attend various tax seminars here and there.  Your tax strategy should be based on advice tailored to your individual circumstances and preferably from an accountant who also invests in properties so that she is in a better position to understand your financial goals.  Think of the advice as an investment for your success rather than a business expense to be minimised.  Click here to find out who fits the bill.  

Tip 9: Learn how to analyse a property 

Many of you reading this blog would at least have the experience of having bought your own home.  Beware, it would be detrimental to assume that buying a house to live in is just like buying a house to rent out.  When you are a homeowner, you buy on emotions.  When you are an investor, you have to buy on numbers.  Don't get caught up on the colours on the wall or the design of the light fixtures, instead, focus on the numbers.  Get your head around net yield vs gross yield, ROIs, value-ceilings, and market rent.  Look for unexplored potentials that can add to your equity and hone in on properties that serve your own investment criteria.  

Related article: 5 biggest deal analysis mistakes investors make

Related article: 10 questions to ask before you buy a rental property

Tip 10: Get your time management down pat

Harking back to the previous notion that you do not invest in a vacuum - chances are you are not just an investor.  You could be juggling your portfolio with a full-time job to supplement your cash flow and improve your serviceability; you could be taking on more familial obligations because you are a 'full-time investor' with no day job.  Either way, your life is multi-faceted and investment is not the aspect that takes up your brain space and time.  Time management is a crucial component to being a successful investor/entrepreneur.  Get into the good habit of valuing your time and respecting priorities.  Remember, it is not about how much time you spend on your portfolio, but rather how you make productive use of the time you give to your investments.  If you find yourself constantly battling the hours and never finishing your to-do lists then start experimenting with different time management techniques such as bullet journaling or the tickler file system.  

Related article: How to invest in property when you have a full-time job?

Tip 11: Stay connected 

Networking is an incredibly powerful way to propel you towards your financial goals.  Being a property investor can feel terribly isolating if you are not interacting with other investors.  Those people in your life who share different priorities could even go as far as becoming dream-crushers and dissuade you from your efforts.  Furthermore, we are constantly drowning in a sea of cluttered messages such as advertisements, emails, and status updates.  Networking will help you rise above all of these noises and focus on your success.  By regularly meeting up or connecting with investors, you will stand a better chance at building mutually beneficial relationships, stay on top of market developments and motivated to continue pursuing your goals.  

Related article: A wallflower blooms - networking tips for introverts

Tip 12: Treat your tenants well 

When you become a landlord, your tenant is your bread and butter.  The notion that you have to be an Ebenezer Scrooge to be a profitable landlord is both outdated and shortsighted.  With residential tenancies getting longer these days, it is in the interest of all landlords to have a professional but friendly relationship with tenants.  APIA vice president Peter Lewis sais, “Most landlords and tenants need each other. There’s No point being obnoxious to each other. It’s like Labour needs National. You need that counterbalance. We’re like motel owners. They rent out rooms by the night. We rent out rooms by the month or year. Without the other side, you’re in trouble. If I can’t rent out I’m in trouble. If they can’t find a place to live, they’re in trouble. We’re dependent on each other.”

While the property your asset, remember that it is also your tenant's home.  By all means, do hold each other accountable to the terms of the tenancy agreement.  Beyond that, don't penny-pinch and always remember to be kind.  

Tip 13: Don't be a headline reader 

Headlines have a nasty habit of toying with our impulses and suppressing our rationality.  Rather than paying attention to headlines, choose to be guided by trendlines instead.  The property market moves in a (largely) predictable cyclical pattern.  There are indicators along the way signaling the change of market phase that you should pay attention to.  Don't be afraid to swim against the tide and make bold decisions based on credible trend lines and market information.  

Tip 14: Learn how to learn 

Know that there is no such thing as a knowledge ceiling.  You could be investing for 3 years or 30 years and there would still be people who can inspire you and experiences you can learn from.  By having a constant appetite for new information and knowledge, you are investing in your personal growth that will translate to clearer points of view, more decisive actions and autonomy over your own future.  Thankfully in this day and age, there are plenty of learning platforms available to us.  The trick here is to pick and tune into the ones that suit your learning criteria.  Are you an avid reader or do you respond better to visual and audio cues?  Are you apt at making meaningful virtual relationships or do you prefer connections IRL?  Are you able to focus in a crowd situation or do you value smaller, more intimate connections?  Remember that the best investors are also the best learners.

Tip 15: Build a top investment team 

There are so many aspects to investing in property that a lone wolf approach will never suffice.  Behind every successful investor is an equally successful and dedicated investment team working to deliver the profitable portfolio.  If you are a new investor then start working out who you will need on your team to help you start your portoflio.  If you have been investing for a while then be sure to regularly evaluate your existing team to make sure that you are not keeping anyone around who is only stifling your potential.  

Related article: Simple steps to successful real estate investment in New Zealand

Tip 16: Trim out the fat 

If you are serious about building wealth then you should be in the habit of constantly evaluating your life and trimming out excess fat.  Imagine what you could do with the extra $1,000/year you save if you kick the daily coffee habit.  How many more investment books could you go through if you turn off the TV an hour early each day?  Don't worry!  The best bits of Housewives and The Bachelor will always find their way to YouTube.  What about your energy and your relationships?  Are you surrounding yourself with the right people who will promote, rather than suppress, your ambition?  Instead of superficial social engagements that are meaningless to you, why not feed your energy with inspiring conversations with those who share your values and goals?  And your health?  Do you have any literal fat that can be gotten rid of?  What is the point of planning for a better, more financially free future, if your body isn't going to be well enough to enjoy it when the time comes?  

Tip 17: Know the difference between frugality and deprivation and be kind to yourself 

You are already reading this blog so chances are you are, at the very least, somewhat financially minded and understand the virtue of delayed gratification.  Us investors are very good at saving, making do and going without so that one day we can enjoy the fruits of our labour.  But when will that day come?  Remember that just as frivolity will never lead to wealth, deprivation will certainly not lead to happiness.  While you are scrimping and saving, remember to be kind to yourself and celebrate every milestone reached.  Positive reinforcements can play a huge role in your sustainability in the market and longevity as an investor.  

So there it is.  A bunch of ideas to help you kick start your wealth plan.  From all of us at APIA, have a wonderful and successful 2017!

 

 

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Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited