Consider investing with others
The power of compounding interest and the time value of money dictate that controlling as many appreciating assets as you can for as long as possible is the key to successful investing.
Australian home ownership rates are around 70% and according to ATO data 8% of Australian’s own at least one investment property. However only around 2% of people own two or more investment properties. Clearly building up a quality portfolio of investment properties is not easy to do by yourself.
So instead of waiting for years to accumulate enough resources to take action and make your investments, co-owning property with others is an alternative that can make a lot of sense. It means sharing a smaller percentage of the rewards but co-ownership:
- Can make you money – it can allow you to get into the market many years earlier than you could by yourself, meaning you get quicker access to capital growth and potentially allowing you to build a bigger property portfolio than you could by yourself.
- Can save you money - as it reduces the amount of money you need to cover purchase and holding costs.
- Saves you time – as you can share the workload of investing and managing your property with the others
- Can help manage your risk – as you can build a more diversified property portfolio than you could on your own. While investing with others can reduce the effects of your own personal investment biases and can allow you to leverage other’s skills and knowledge to your advantage.
Co-investing requires a high level of trust to succeed. For that reason it helps if the members of your property collective are friends and/or family members. If you’re not in the position of having friends or family members who share your goals consider looking for potential partners by:
- Asking your inner circle to recommend your idea to their friends or family members. Odds are that the person you are looking for is only one or two degrees away.
- Posting your idea on a property investment discussion forum and see who responds. You never know what response you could get if you put your idea out there.
- Posting your idea to LinkedIn groups. There are now many LinkedIn groups that have formed around property investing and property development.
Tim Riley is the founder of Property Collectives. Property Collectives helps groups of friends and family develop and invest in property together. To find out more visit www.propertycollectives.com.au or contact Tim on 0407 846 965