We wanted to go through some ‘myths’ and “realities” people have about building investment property portfolios. These stop people from progressing with their financial futures.
Roadblock #1: Choose Property First and Think of Finance Later
For every time we had a dollar where people said – “where should I buy my investment property?” well before they even thought of the strategy aspect – both finance & investment selection.
This alone stops people from moving forward beyond the first investment property. That’s because they aren’t thinking for the long term. They don’t have a ‘step by step’ strategy laid out to enable this first property and beyond.
The Australian Taxation Office (ATO) 2015-2016 stats released in April 2018 that we shared, revealed 71% of all property investors (2 million) own only 1 investment property.
That’s because that’s they are never thinking about strategy. And it’s not their fault. No one has shown them step by step to build out a strong property portfolio.
Roadblock #2: I can go to any bank and build my investment property portfolio
There is a myth that all banks are equal and the only differentiating factor is the interest rate. WRONG. Different banks have different niches.
What about…
- How much equity can you pull from your existing property?
- What about valuation? For example, we have seen various valuations ordered properties – which can range 10% to 15% depending on the valuer (watch the video we recently did on how valuations are conducted)
- Will your existing lender allow you to pull maximum equity to move forward with your portfolio?
- Are you choosing the most flexible finance set up to pay off your home faster AND build a property portfolio?
- How should you structure your home finance versus investment property finance?
- Are you managing risk well while you progress?
- Can you purchase 1 investment or 2 or 3 or more with your current resources?
ALL This is STRATEGY!
Roadblock #3: I can ”Do It Myself” (DIY) or just ask my local banker (Specialist vs Generalist Advice)
Do you prescribe yourself medicines (unless of course you are a doctor?!)?
Do you service your own car?
Or do you work with an expert?
Some people like to “Do It Yourself” (DIY) and that is totally fine. The result you will get will be similar to…..
….mis-prescribing yourself medicines (if the pharmacy lets you have them…)
….or not even servicing your car once a year…soon you will be with a car not looked after – needing you to change your car more often than you have to…
When investing in property it’s important to consider who you’re taking advice about finance and property? It’s not uncommon for people to seek advice from friends and family.
It’s incredible, how people take years to build up savings and equity….and then rely on these 4 things…
- A 5 minutes of “Google” search (which ONLY shows you the lowest rates– try it!)
- Going to a bank’s online calculator to determine what you may be able to borrow for your next investment (this calculator doesn’t care about your long term goals or drivers!!)
- Walking into a branch and getting that approval in 30 minutes (again your long term goals – were they discussed? Did you maximise opportunities available to you? Did you receive a ‘step by step’ strategy tailored to your goals & circumstances?)
- Often what we hear is….my brother in law started a business part time and has hooked me up with an investment loan (So…did you consider YOUR long term goals? is there advice about how you can grow to your next investment property? Did you receive a ‘step by step’ strategy?)
That’s like going to a GP when what you really need is a specialist surgeon.
Makes sense?
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