Do you ever just get into your car and drive? Not knowing where you are going and not caring where you are going to end up? Of course not. It may sound like something out of a romantic movie, but if you did that, you’d just end up in traffic somewhere, wasting petrol for no reason.
The best way to make sure you have an efficient journey is to know where you want to go and think about the best way to get there before getting behind the wheel.
The same applies for property investing…especially if you want to scale up to an impressive multi-asset portfolio.
Pick an end goal and plot a course
If you have already started investing, you hopefully have an end goal in mind. If not, stop everything and create one! A lot of people invest in property because they think they should, but without an idea for where they want to get to, they will be driving aimlessly in traffic.
Is your goal to create a passive income that allows you to retire early? Maybe you want to purchase 10 properties, then sell half to pay off the rest and create an unencumbered wealth vehicle that can be passed on to your kids and grandkids.
Ever wondered how B Invested founder Nathan Birch accumulated more than 220 properties? He looked at his end destination first, worked out the hurdles he would encounter along the way and created a roadmap to get there. Sure, his very first end goal wasn’t to buy 220 properties, start several companies and move into hotel management… but he did so well with his first goal, he was able to set new ones and keep achieving.
It takes a village
Nathan didn’t begin his property journey as a professional accountant, buyer’s agent, lawyer, financial adviser or property manager. And he would not have been able to build that portfolio without the right professional help. The specialty areas of investing are best left up to the experts. And he has stayed engaged with his team of professionals throughout the journey, employing more with different skill sets when necessary.
One of the most important areas to get ongoing help is your finance strategy. Your mortgage broker shouldn’t just help you set up your first loan and then disappear.
You need to make sure you use your equity well; that you have cash flow management in play; and of course, that each loan is set up correctly and your financing is spot on.
The reason this is really important is because a lot of people still get trapped in a corner. Their broker might get them buying new properties with 95% LVR and 5% deposit, which keeps them tied to that one bank and unable to move for a better deal when it arises.
Or they’ve been advised to fix interest rates and they’re now stuck.
Zinger Finance has brokers who are also strategists and they can help structure loans with future investing front of mind.
The day to day
Some people work very hard trying to be their own property manager, all just to save around $50 per week. But it takes a lot to be a property manager. If you don’t have an intermediary between yourself and your tenant, they can contact you often, tie you down and take up a lot of your time.
If you’ve got five properties and dealing with all those tenants, you’re trapping yourself and trapping your growth, by dedicating all your time and efforts to save less than 10% of your cashflow.
Having a good property manager to support you will help you make sure your portfolio is run like a business. Not only do they take care of the tenant’s day to day needs, plus collect your money and organise inspections and repairs, but many can be engaged to manage things like paying your council bills, water rates, strata levies and even insurance bills.
Often it’s as simple as ticking a box on your management agreement and getting the bills sent to them. Scaling up your portfolio means everything needs to be systemised and process driven to be time and energy efficient.
Imagine Nathan didn’t have property managers? And he had to organise everything for 220 properties? It would be impossible. And if you want to build a big portfolio, it will be impossible for you too. Don’t sweat the small stuff, let others do it for you.