Ever wondered what the secret sauce is that makes top property investors successful? Well, if I knew that I would have bottled it and be flogging it on the Internet. But, the fact is, there isn’t just one thing common to all success stories.
This was something that was bought out in my recent conversation with Tyrone Shum on the Get Invested podcast. As host of a hugely popular podcast himself – Property Investory – Tyrone has interviewed dozens of top property investors. What he’s found is that there is a myriad of strategies, points of view, mindsets and tips that have helped shape these top investors. However, there are a few strategies that are common to almost all of them. Let’s take a look:
Lifelong Learning and a Focus on Action
As Tyrone says, after interviewing so many top property investors, his key learning is, well, learning – continual learning. “A lot of my guests have said that the reason they are successful is because they are continually learning and investing in their education and their mindset, and because of that they are able to grow in substantial leaps and bounds,” he says.
But there’s an important caveat to this. It’s not knowledge purely for knowledge sake. The real key is putting that knowledge into action.
Seeing the Opportunity in the Property
As I often say, when it comes to investing, a house is essentially just a moneybox in the shape of a house. It’s the tool that enables you to do other things long-term, to secure your future and, ultimately, replace your income.
Many of Tyrone’s success stories have a similar philosophy. Property is actually just a building; it’s what you do with it that counts. It’s is how you perceive it and how you can bring an opportunity to the table using that physical asset. How can you turn it into something that could be valuable to you?
Buy and Hold for Long-Term Wealth
Although all of Tyrone’s property success stories have different interests, passions and strategies, the underlying message is invest for the long-term to secure your wealth. A majority of these investors take a buy and hold approach – buy quality property and hold it for long-term growth.
Take it to the Next Level with Property Development
What Tyrone has noticed about the most successful investors – those who have grown massive wealth – is that they have taken it to the next level with property development. That might be renovations, subdivision or whatever.
“Usually what happens is once you’ve got a foundational portfolio, and you’ve built it up enough so that you’re financially free, the next step is to delve into property development,” Tyrone says.
“And through property development, instead of buying the property to just hold you actually add value, or create additional value, and then you’re pretty much printing money in your own backyard,” he says.
Printing money in your own backyard: It’s a great quote and a great way of thinking for property investors who want to take it to the next level.
To hear more about these tips and strategies, the Property Investory podcast, and Tyrone’s own fascinating journey from real estate agent to digital marketing guru, nomad entrepreneur to top podcast host and budding property developer, have a listen to the entire episode here.
There are plenty of people out there who, on the surface, have it all. They’re financially successful, have a beautiful family and are perfectly healthy. But many of those people are incredibly unhappy and are putting on a front all day while still feeling depressed and empty when they take any time to reflect.
Peter Finn of Face Contracting was in this exact circumstance roughly 6 years ago. He was wealthy beyond what he could imagine growing up as a working-class kid in Cobar, Australia. He had a lovely wife who was also successful in her work. But he was deeply unhappy.
So Peter took some time to reflect on what was really important in life and came to some enlightening conclusions. On a recent episode of the Get Invested podcast, Peter and I had a wonderful chat about what Peter thinks we should really be focusing on: namely relationships. For Peter, the relationships you make with those around you, and the reputation and legacy you leave behind, are the most important things you can put your time and energy towards.
When you’re on your deathbed, he told me, you’re not going to think about the investments you made or the jobs you worked. You’re going to meditate on the relationships you had, and whether you were a force for good with those in your life. It’s a scary thought, coming to the end of your days and realising that you spent all of your time obsessed with work and numbers, but it’s something you should think about.
What we all chase in life is fulfilment and achievement, Peter tells me. That feeling you get when you lose weight, or help an old lady cross the street, or receive praise from your peers — that’s what makes the difference between a fulfilling life and one that is merely spent passing the time.
In my own business, I help people make roadmaps in their lives so that they can cultivate passive income and reach financial freedom for themselves. Money isn’t everything, of course, but achieving financial security is a major step in having a healthy social life. Being able to take care of your family, or take the time off to visit an ailing parent or go on vacation, are all impossible without a comfortable nest egg.
These are, of course, just a few aspects of maintaining a healthy social life. People devote their entire lives to trying to understand relationships, and a short article isn’t going to cover all the bases. But if nothing else, I hope Peter’s words make you take a few moments out of your day to think about what’s really important in your life.
Listen to my entire conversation with Peter here.
My work with Know How Group is centred around a very simple, yet very powerful vision: using property and wise investments to create time and freedom for our clients. More than anything else, we want the people that come to us to stop being driven so much by work and have the time and energy to focus on things that are important to them, like family and their passions.
This is a noble goal, but a difficult one. Whether you work with Know How Group or not, there’s a very important aspect to this journey that you can’t ignore, which is assembling a team that can help you achieve your goals. Long gone are the days when a snake oil salesman tries to be a one-stop-shop for your investment goals, pretending to be an expert in everything and promising to get you rich quick.
Every step of the way, you should have team members that are specialised and have plenty of experience in their given disciplines. First and foremost, you’ll need a great accountant to count up the numbers and look after your tax situation. This is something of a golden rule when it comes to investment: a good accountant can be worth their weight and more. They can save you a lot of money on tax — and you all know how much of an emphasis I put on not overpaying on your taxes — and pay for themselves, essentially. They can also keep you out of trouble, as somebody who doesn’t know what they’re doing can cause unnecessary hiccups along the way with regards to your finances.
You’ll also need financial planners to look at your equities, shares and other aspects of your investment portfolio. Maybe you have some experience playing with shares and consider yourself something of a savvy trader. That’s all well and good. But the fact of the matter is that you don’t have the time to really do it well. Playing with shares for a few hours on the weekend is not the same as keeping an eye trained on your investment portfolio throughout the entire week. If anything, having a good financial planner can also pay for itself, as they’re going to bring you returns that you almost certainly couldn’t have gotten on your own. And with all the time saved, they’ll bring you peace of mind — which is invaluable.
There are other team members, like project managers, that will help round out the process. The key factor here, though, is that they are independent experts. You don’t want to be swindled by an in-house team that promises to get everything done with one or two people.
At Know How Group, we divide our customer experience into four F’s: fast, friendly, frequent and fun, with 100% accountability and 0 excuses. Having top-notch customer service is something we pride ourselves on, and making the investment process quick and easy, with an ace team, is of utmost importance.
Listen to my entire conversation with Glen here.
With more than 20 years experience in accounting, Tony Dutton has seen his share of investment success stories — as well as his share of failures. Poor outcomes generally come from a lack of proper planning and the wrong kinds of people in your life, he says. On the latest episode of the Get Invested podcast, Tony gave me some of his key pieces of advice for getting an investment portfolio up and running:
Find Calculated Risks
Approaching your investments with a “get rich quick” attitude may — with quite a bit of luck — pay incredible dividends. But it’s also a great way to irreversibly lose your hard-earned money. Instead, you should look for investment opportunities that are risky enough to yield decent returns (property, for example) but not so risky that you could lose your savings in the space of a week.
Strategise Sooner, Not Later
It’s an old adage, but one that is crucial to learn for any investor: the earlier you start planning your financial future, the better. Whether you’re 25, 35 or 45, there is still time to sit down and decide what kind of lifestyle you want to live when you get older. If you don’t strategise, life will pass you by, and you will wake up 80 years old wondering where all your time went.
Invest In Yourself
Before you consider your financial plan, you should first take care of yourself. Whether it’s physical, mental and emotional health, yourself and your family should be your first priority. Money is important, and a crucial key to personal freedom — but it isn’t everything. Make sure you aren’t sacrificing your happiness and well-being to chase your financial dreams. Prioritise personal fulfilment over sheer income, and things will inevitably turn out better.
Find A Good Accountant
When it comes to investment, the most important person you deal with is your accountant. A good accountant can make your financial journey easy and painless, helping you optimise your taxes and keep your investments in line. A bad accountant, however, can potentially ruin years of finances and set your investments back to a point of no return. Finding a good accountant is something that you should put plenty of time and money into.
Just Do It
Once you’ve done your financial planning, you need to pull the trigger and move forward with your plan. Too many people get ‘analysis paralysis’ and keep themselves from actually taking the actions required to see their investments grow. In my experience, there seems to be a mental block that some people have and others don’t. This hesitation will hamstring your entire investment efforts, so put it out of your head and take action.
Investment isn’t simple. But by taking a methodical approach to the matter, you can build a healthy nest egg that produces plenty of passive income for you in the future. Just make sure you get out there and realise your goals.
Listen to my entire conversation with Tony here.
The value of a good property manager is often underestimated when comes to the long-term success in property investment. If you’ve got a good property manager your journey can be a dream. However, choose a bad one or, worse still, try and do it yourself and it often leads to a lot of stress and sometimes financial disaster.
There’s no better person to ask about this than my recent guest on the Get Invested podcast – Lauren Robinson. As an award-winning property manager and long-term property investor, Lauren has seen the good, the bad and the ugly from both sides of the coin.
Here is what she would look for when choosing a property manager:
Choose A Dedicated Property Manager
First up, Lauren recommends choosing a dedicated property manager or firm simply because they are more focused. Their attention isn’t divided between making property sales and the rental roll.
Meet The Property Manager Face-to-Face
She also recommends meeting them face-to-face. It’s a good way of gauging the quality of their service and how well they understand the legislation, which is critical in good property management.
Find Out About Their Leasing Process
If you have a vacant property, how are they going to market the property so that it stands out in the marketplace? Do they do personal viewings? Do they hand out keys? What sort of background checks do they perform?
Ask For An Example Condition Report
The entry condition report is one of the most critical documents in property management. It sets the tone for the entire tenancy. Ask to see one and make sure you’re happy with its standard.
Who Carries Out Routine Inspections And How Often?
As well as finding out how often routine inspections are done, make sure you know who performs them. Good property managers will do them themselves, while for others its done by a junior or even outsourced.
How Will You Be Notified About Maintenance?
It’s also important to know how maintenance is dealt with. Will you be notified, how and when? Do they have any systems or technology in place to handle the maintenance process?
Does The Property Manager Have A Portfolio Approach?
Does the property manager look after a portfolio of properties from end-to-end or are particular functions like leasing, for example, taken care of by one property manager and inspections by another. An end-to-end portfolio style means the property manager is in touch with what’s happening at your property and more likely to be across any issues.
If you’d like to find out exactly how Lauren goes about finding a good property manager, you’ll find a complete checklist in her book called Rented.
Listen to my entire conversation with Lauren here!
Dollar cost averaging into index funds is seen as a bit humdrum these days by many investors, but maybe it deserves another look. I recently had the honour of speaking with podcasting legend, John Lee Dumas, on my own podcast, Get Invested.
As host of the hugely popular, Entrepreneurs On Fire podcast, John has probably picked the brains of more of the world’s top entrepreneurs and investors than anybody, so it’s intriguing to see where he puts his own money. It turns out he’s a fan of dollar cost averaging into index funds – quite a simple, basic-to-basics, long-term approach, to which John adds his own particular twist for a bit of spice. It’s what he calls ‘The Explorer’.
What Is Dollar Cost Averaging?
Essentially, dollar cost averaging is a way of investing that smooths out the bumps in the market. John has a neat way of explaining it: “Hey, you may not have $100,000 to drop into the market right now, but if you’re able and willing to drop in 200 bucks a month, on the first of every month, into an index fund, you’re dollar cost averaging, meaning when the market is up you’re buying less shares, because you’re investing just that $200, when the market is down you’re buying more shares,” he says. “Over time, with the trending of the market, over 30, 50, 70 years, that’s going to return a really great investment for you, so, for me, dollar cost averaging was a great piece of advice.”
What Is An Index Fund?
Index funds simply track the movements, or mimics, a particular group of shares or a whole market. In essence, this means that if the market – say, the Australian Stock Exchange, for example – grows by 10 per cent, then the value of the fund grows by 10 per cent. It’s not rocket science, and there’s a bunch of different funds, tracking different markets commonly available.
The John Lee Dumas Twist – The Explorer
This secure, no-brainer approach forms the basis of John’s investment strategy, but it’s not the whole cake. John explains it best himself:
“Dollar cost averaging into index funds has been a great investment for myself, with what I call the core of my money, that 80% core, so a very conservative dollar cost averaging into a broad index like the total market index and the international index. “And, with that other 20%, I do what I call the explorer, that’s where I took a winger a few years back on both Amazon and Facebook, just two companies that I think are going to dominate the world, but I don’t know that I just think they are, so I took a winger on that, you know, with not all of my money, but with a nice solid 20%, and they both returned well over 100% since I’ve invested in them and that number just keeps going up.
“It will go down when we have the next market crash, no doubt. But I think, over the next 40 years, that those will be good investments, and again, if they’re not, that’s why I have my core,” John says.
John’s strategy is certainly food for thought. As I said, it’s a type of investment that’s been a bit out of favour with investors. But, for you, maybe it’s worth another look as part of your holistic investment strategy?
Listen to my entire conversation here.