When was the last time you went on a holiday?
For some that may be a touchy subject, as we find both national and international borders closed.
I am sure I’m not the only one that is eagerly awaiting the borders reopening.
When they finally do and holidays are back on the agenda, I would suggest there will be a similar process involved for many would be travellers.
But what on earth does that have to do with Property Investing you may ask.
I believe there is a link between the decision making process of choosing a holiday and investing in property.
Here are my thoughts;
- Begin with the end in mind
I was lucky enough to spend Christmas in New York last year.
I had planned and prepared that trip for more than 4 years and dreamt about it daily!
Where did I start?........
I started with the destination and then worked backwards.
I knew where I was flying to, the Airport, I had my accommodation picked out and where I was staying.
I even spent hours online working out where we would have our Christmas Day lunch.
I feel that this is the biggest thing property investors overlook.
They do not know what the end or destination looks like or perhaps where they are flying to.
They end up buying a few properties with a short-term hunch or goal, without any thought or focus on if it is moving them closer to their end goal.
It would have been like me heading to the airport, jumping on an aeroplane, and hoping we landed in New York.
Don’t leave it to chance!
- Who is driving?
It may seem like an easy question, particularly if you are traveling locally and driving by car.
But what if your choice of travel is by train, boat or aeroplane?
You clearly would not waste your time and energy to learn how to fly a plane or pilot a ship or train.
You would put your faith in the hands of a professional, with countless hours of training and potentially thousands of trips under their belt.
With property investment, the fastest and safest way to get to where your going is to trust someone who has been there and done that countless times before.
They have devised and refined a known and proven strategy or framework over decades.
Going it alone is too risky and take far too long and I would suggest that is the reason most investors never get to their end destination.
The old saying “If you are the smartest person in your team, you are in trouble”.
- Choose your vehicle
Once you have your holiday destination in mind, then is the time to select your vehicle.
When travelling overseas your options may be limited, but in most cases, people will mostly select the fastest and quickest way.
The same also applies to property investing.
Once you have you longer term goals and destination set, now you must ensure you select the right property.
Where do you start?
Should you by for growth, cashflow, commercial, industrial or residential.
I suggest you apply the same principle as you did to your holiday.
To create wealth, you will need to accumulate a number of properties and then have them compound, grow and create wealth for you over the long term, to build your cash machine.
So initially, the right type of asset will be the one that gets you to your goal faster.
If you are building a property portfolio, then it will be the property that gets you into your next property the quickest.
- Continually check your course
I was amazed to learn a number of years ago that aeroplanes continually run off course.
The pilot that is continually monitoring, adjusting and making the necessary changes to ensure they stick to the route and make it to their destination.
Clearly the quicker they are able to assess and change, the less they are off course and without need for massive changes or time delays.
Once again, so it is with building a property portfolio.
Once you have a strategy and an understanding of where you need to be, you need to continually check in.
We do this for our clients on an annual basis as a minimum.
It is too late 5 years down the track to realise you should have sold an underperforming property or perhaps had an opportunity to buy another property at an earlier stage.
Likewise, a renovation or a development could have given the portfolio in increase in equity and boosted cash flow.
There is a lot that can be transferred from the way people make decisions about holidays, to the way they should look at investing.
Clearly, understanding the destination or the end game is critical.
I would suggest that this is the main reason that most investors never create enough wealth over the longer term.
They tend to have more of a buy and hope strategy.
When you do understand your destination, find your driver, someone who has been there and done that to get you there quickly and safely.
The vehicle will also be important, you would not choose a car to drive from Australia to America, it will take far too long.
Likewise, with the property, the best property will be the one that gets you to your end goal faster.
And finally, do not leave it to chance.
You will now have a plan and strategy and should continually check in to ensure you are on track.
If you get it all right, you may well be panning a lot more holidays!
Brett Warren is a director of Metropole Properties in Brisbane and uses his 18 plus years property investment experience and economics education to advise clients how to build their portfolios.
He is a regular commentator for Michael Yardney's Property Update.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.