According to ATO data, 72.8% of individuals that owned an investment property owned just one. Meanwhile, 18.9% of individuals owned 2 properties while just 0.9% of individuals owned 6 or more. More shockingly is that there are only 5.3% of Australians that actually own any investment property at all.
So what’s going on?
Even though there is a greater movement towards property in SMSF, as people become increasingly aware that the government pension isn’t realistically going to be enough to live on at retirement, the knowledge of how to truly make the remainder of our working years create the most successful investment property portfolio is still limited.
There are a number of reasons why people who own their own home do not go any further, investing in a string of properties.
1. Fear– In my experience, fear is definitely the first reason, especially for those who have painstakingly budgeted for years to pay out their own home.
2. Knowledge – Understanding the various options available to them is often lacking & they become informed by television or media print, which usually depicts only the negative about investing in real estate. It makes for better ratings to interview someone who has been stung by the industry then a string of successful entrepreneurs. The tall poppy syndrome still has it’s day unfortunately.
If you have plenty of time on your hands to get informed by watching television then you really aren’t going to get very far. It takes a team of experts with a clear plan of what it is you are trying to achieve to make it happen. Unless you are extremely lucky purchasing lotto tickets, get rich quick schemes are all bullshit. If the person who spent thousands of dollars in the last few years on various get rich quick schemes, spent the same amount of money acquiring knowledge & paying the right professionals to work with them ie financial advisors, specialist investment real estate agents, then they probably would be on to their third property by now.
We usually find people try all the interesting ways of making money until they have been beaten to a pulp by the industry & robbed blind, many give up there. The ones who still have a bit of wind in their sails finally start where they should have started from the beginning, seeking out knowledge. They then kick themselves later on realising that there are plenty of ways to double investment power with the right people, goals & plan in place. They become experts in investing in and out of SMSF & are quickly on their way again, just the right way this time. They are also usually the ones giving advice to copious friends & family members, leaving out the fact that they were also just like them not that long ago.
3. Goals – planning, planning, planning. You need to assess your goals before starting. Goal setting will help you ascertain clear direction to becoming a property investor. New direction requires changes to ones lifestyle to become successful. So your journey to become a successful property investor will insist you take a good hard look at yourself both positive and negative & start implementing the changes you need to make for it all to come to fruition.
4. Finances – Usually lack of finances, is why most people stop after just one investment property. It is very easy to sell a client one property. Many investment property consultants are trained to make one sale, they do not have the right network of professionals for their client to continue holding their hand & continue their wealth creation. The easiest way for you to determine if you are being scammed by a property consultant is to listen to the questions they are asking you. If they do not ask about your long term goals including retirement, then they are either only interested in getting their one sale over the line or are not experienced enough to teach you more then you could figure out yourself.
5. Intuition – This is imperative in finding the right team of professionals to work with. If it smells like a rat, I can guarantee you there is a whole plague coming! Don’t be pompous, but don’t be stupid either. Many new investors armed with the excitement of putting a team of professionals together, start telling them how to do their jobs…yeah that’s not really too bright!!!!
Maintain a healthy disposition when creating your team. Tell them what you are trying to achieve & listen to their responses. Mix up your team a little. I’m always dubious about property consultants who are a one stop shop completely. I’m not talking about the real estate agent who when you need a solicitor for your contract recommends a particular firm who they have been recommending to clients lately as the feedback has been all positive.
If you are recommended someone by a professional, ask them if they get a referral fee for passing on clients. If they do receive one they aren’t instantly sharks, but a little probing about how that fee came about usually tells you if the referral is worth investigating or not.
Many Australians who own their own home have enough available equity to become a property investor, but are afraid to take the next step in case all the hard work it has taken them to pay off their own home goes badly & they end up back at square one. Remember these things when taking the next step as this is the order the professionals work in to help you create your property portfolio;
by Melissa Gaultier
We are always happy to chat with people who are wanting to start a property investment portfolio, but aren’t sure how to go about it.