What to do when you have properties but can’t move forward.
If you have found yourself stuck after purchasing a few properties, then you are not alone. According to ATO Data released in April 2018, there were only 122,696 people in Australia who owned 3 rental properties during the 2015-2016 financial year.
When you compare this with the 1,494,508 who owned just one property, and the 20,023 who owned six or more, you notice a definite trend – most people own fewer properties rather than more.
But owning a large portfolio is not impossible. If you feel stuck and can’t move forward, there are ways out of your situation.
When Nathan got stuck.
Most people are surprised when they hear about Nathan Birch. The self-made millionaire managed to build an investment portfolio of more than 200 properties in the space of almost 15 years.
Nathan says that recently he found himself stuck and unable to move forward. But, the co-founder of Binvested wasn’t prepared to say die.
“I don’t like having money in my bank account,” he says.
“I like having assets.”
He uses the money generated by his assets to purchase even more assets – in line with the following quote:
“Poor people focus on cash, money and salary whereas rich people focus on controlling assets and net worth position.”
What vehicle do you need for the journey?
Nathan says sometimes you may find yourself in a position where something has run its course. For instance, you may have a car that keeps breaking down. While you keep fixing it, it is costing you a lot of money, time and stress.
The question is, do you get rid of it and buy a new car, or do you hold onto it and hope that by some miracle it will sort itself out?
The same can be said for property. There may come a time in your investing when you need to reassess things and decide on a new course of action.
Nathan gives the following analogy.
If you want to travel to Perth, you first need to know where you are now before you can figure out how you will get there.
Then, you need to decide on a mode of transport. You may choose to fly there, but the airplane won’t pick you up from your house. So, then you have to figure out how you will get to the airport.
You may take a taxi or Uber there, for instance, before flying to Perth. Then, you may have to take another taxi to your final destination.
In other words, getting to your end goal as an investor may mean using different vehicles along the way. Sometimes, you will have to ditch one of those vehicles in order to travel on the next – just like how you must leave the taxi behind when you get to the airport.
Also, you need to know where you are with your investing before you can figure out how to achieve your goals.
“A lot of people think I’ll just buy a property and it will be okay.” Says Nathan.
He says with this sort of mentality; it is like they have chosen to walk to where they want to be without even knowing where they are starting from.
When they get stuck along the way, they think there is no way to move forward – but, maybe they could have taken a better vehicle and route to get them to their destination.
Weighing up your options.
There may come a time in your investing journey when you need to review your portfolio and see whether certain properties are worth holding onto.
“I’ve been there and I have sold properties,” says Nathan.
Other options may include renovating, developing or adding on extra dwellings to see if you can turn those properties into ones that will allow you to move forward.
There is no definite strategy or easy fix when it comes to moving forward. It all really comes down to looking at where you are now, and figuring out if there are viable ways to change your situation for the better.
Having a good team of experts.
Speaking to an investment expert who can give you honest and well informed advice will give you an idea of what your options are.
A mortgage broker can help you identify what you need to do to improve your serviceability in order to buy more.
A financial planner may help you with a savings or investment strategy that could help to bridge the gap.
Having a proactive mindset will also help you move forward. Even if you find there isn’t much you can do now, you can at least develop a plan that will help you stay focused on your goals and prepare you for action further down the track.