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Ryan Smuts: 5 Non-negotiable habits of a top property investor

Saturday, June 09, 2018

Understanding that property investment is a business and treating it as such is the foundation for becoming a successful property investor. Like any business, you will need to first determine what goals you have for your ventures, what your desired end position looks like so that you can ensure you get there. Having no goals when you invest is like driving around in your car to a new destination without a map.

Investment/financial principles

There are points which you must take into account when trying to figure out exactly how to get to your desired destination. You definitely want to ensure you have figured out from a financing perspective, how you will build for the long-term. In many cases people will usually hit a wall in relation to financing ability – this will either be due to lack of deposit, or lack of income (serviceability).

This means that you will, early on, need to ascertain where you are likely to struggle first and build on that weakness. For example, if you are lacking in deposit but have a  high income, you may be targeting properties where you can add value and build equity quickly so that you can continue investing. The flip-side is if you have a large deposit but a low-income, you may need to look at higher yielding properties so you aren’t limiting yourself too early. “Beginning with the end in mind” is a habit of any successful person, and the same is true for property investing.

Cycle-proofing your portfolio

CREDIT: myproperty.coachCycle-proofing your portfolio begins with understanding the property cycle itself. As you’re probably aware based on the market itself it looks like at this stage we’re in the peak and heading toward the slowing down period – how near the ‘slump’ is, is hard to tell. It is key to note that money can be made at any point in a cycle. It may be harder in some parts than others because, in a rising market, mistakes are easily forgiven, but provided you stick to your buying rules and always buy well, you can achieve great margins. Cycle-proofing your portfolio is ensuring you have a mixture of assets which can provide both asset growth and rental return – particularly if you’re looking to play the long-game. In some instances, the benefits of having high yielding properties can offset the cost of holding your capital gain properties which mean that it isn’t as tough holding onto these in difficult economic times. This would be the same as diversifying your portfolio in other investment vehicles. The habit here Is ensuring you understand the market you’re investing in and pay close attention to ensure your position isn’t compromised by what the market does, and rather it is dependent on what you are doing.
 

Creating real wealth with property

Real wealth in property is made over time. This is something that is key to understanding the nature of the investment. I am not saying that money can’t be made in the short-term, but what I am saying is that if you are hearing of a ‘get rich quick’ scheme in property such as property trading and achieving massive gains, the following is likely to be true: it is more difficult than it sounds – and trader’s I’ve worked with have worked extremely hard to realize the returns, OR, you’re not hearing the full story and there is more to it. Over and above this, the current government is making it more difficult for this sort of speculation in the market.

With the above in mind, the next habit is patience. Understand that your investment vehicle is likely to – in its own way - compound over time, provided you’ve bought appropriately and are also actively looking for ways to increase the value or make the property more appealing to a tenant to achieve higher yields.

Be disciplined

Discipline is the key to building a successful portfolio. You must be clear on your buying rules and understand that your success will be dependent on your ability to stick to these rules. Another major key is grasping that you will never be an expert on everything, and that you need to spend your time on being the investor – not necessarily the advisor. In this, instance it is imperative that you have the right expertise around you by way of a strong support network/team who can streamline things for you. Namely, parties such as: Mortgage Brokers, Accountants, Solicitors, Property Managers, Real Estate Agents, Insurance Brokers, and the like. Like Henry Ford, your success in this field will not be based on your ability to know all of the answers – credentials such as degrees and the like are not a requirement to be a successful property investor, but instead your success will be dependent on your ability to find the answers you are looking for – and this will come from having a great team behind you.

Summary

In order to be a su ccessful individual you must develop the habits that emulate those that are already successful in your chosen field. In property investment, it is no different. The habits you want to maintain are: Developing strict buying rules & sticking to them, Beginning with the end in mind and setting goals to ensure you are headed toward a destination which has been designed/chosen, cycle-proofing your portfolio so you are safe in difficult economic times, being patient, and ensuring you have the best possible team around you.


ABOUT THE AUTHOR

Ryan Smuts 

Ryan is a Key Accounts Manager at Kris Pedersen Mortgages and Insurance. Ryan can be reached on 021 193 9333 or ryan@krispedersen.co.nz

 

 

 

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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.  

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