The most successful property investors are those who treat property investing as a business. Anyone who has run a business will tell you that its success depends on selecting the right people for the right roles and building a committed, reliable team of people who share your goals. In just the same way, smart property investors will build a professional support team around them. These people will have the technical skills that the investor might lack. You can’t be a “jack of all trades” because as the saying goes, you just end up becoming a “master of none”.
What’s your role?
Before you start selecting your property team, be clear on the role that you will play. You are the managing director. You need the vision which starts with setting your ultimate goal (e.g. financial security, early retirement, improved lifestyle in retirement – why not all three?) and a timeframe to achieve this goal. Break this ultimate goal down into smaller milestones or touch-points that you review regularly. You may well have a busy professional life and so be clear on how much you can do yourself and look to enlist professional help to do the rest.
In business, every CEO’s right-hand man or woman is their CFO (chief financial officer) and in politics too: the Prime Minister relies heavily on his Finance Minister (think Hawke and Keating or Howard and Costello). Property investors also need to have excellent financial support, so your first team member will most likely be a mortgage broker or finance professional. They will review your financial situation with you, cost your goals and create a financial plan that will lead to your final desired destination. This will involve working out how much you can afford to borrow, how you will pay it back (serviceability), the best ways to increase your equity and add to your property portfolio. You need to have 100% confidence in your broker/financial adviser who will also source the best lender and best deal for you.
Tax and accounting adviser
Tax planning can make a big difference to the return on your property investments so a tax accountant is an invaluable member of your team. They will help you structure your investments, working out in what name to buy the property, i.e. joint names with a partner or through a company or a trust. They will also advise you on any tax deductions you are entitled to and how to claim these.
Undertaking property research and selection
With your tax and financial support in place, it is time to start sourcing the best property that fits your investment strategy. Research is paramount, both your own and information you can obtain from experts in the industry. Talk to investment real estate agents, ask questions, read industry publications and generally ensure you check as many facts as possible. This may take a bit of time but it’s better to be as well informed as possible and taking advice and checking it out will ensure you are able to make the best choices.
Before you sign on the dotted line on any investment contract you will need to seek good legal advice. An experienced property investment lawyer can save you thousands by ensuring you avoid making costly mistakes. They will review contracts and suggest conditions and clauses that give you protection.
When you are selecting your property team, qualities that are important are: good communication skills, good reporting, transparency and honesty, availability and a willingness to answer ALL your questions.
You should always be fully confident in your team and be able to sleep soundly at night. Don’t make decisions in a hurry and if at any stage you don’t feel comfortable with the advice you are being given, then reassess your team.
Philippe Brach is CEO of Multifocus Properties and Finance
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property