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Many people lose sight on why they want to become a successful property investor. Here’s why it’s important to view your goals in the same way you would a business.
Speaking on a recent episode of The Smart Property Investment Show, Cam McLellan, director of Open Corp, shared why property investing should be thought of as a business for it to really pay off in spades.
“I used to give the analogy to clients: When you jump in a taxi, you don’t just jump in and randomly drive around the place. You tell the taxi driver exactly where you want to end up. And by pinpointing where you want to end up, you get there,” he told host Phil Tarrant.
“I see so much talk about property investing, but there’s [often] no specific point and financial goal that people want to get to. Really investing is about [goal] setting... And [it’s] the same with business: create process that gives you a measured outcome. And if you don’t do that, your business is just blowing in the wind.
“Property investing is a business, so what we train people to do is get really specific on the time frame and the amount they want in the future, and work backwards from there. At the moment, and why I thought it’s probably poignant to talk about exit strategies, we’ve been operating since 2005. We’re an incorporated [business]. We’ve got a lot of clients transitioning to carefree living is what we call it rather than retirement. So, depending on their lifestyle, it’s really about their goals.”
Using himself as an example, Mr McLellan said he partnered with fellow Open Corp director Matt Lewison’s brother to build out his property portfolio further.
“Matt and his brother Al built a portfolio early days, which I think is a really good example to talk about. And they’re selling out of that portfolio for their own reason now. But funnily enough, Al and I also built a property portfolio over the last couple of decades. We’ve got our own individual portfolios and I’m hanging on to mine for decades to come, but Al and I built a portfolio together. We had 24 residential properties and a number of commercial properties in that portfolio. And we built that over... And we had businesses together, so we bought the commercial. And then moved office and bought the commercial again, and then just kept taking on resi-properties,” Mr McLellan said.
“As the commercial properties went up a bit, we grabbed the equity out and diversified and built that portfolio. We‘re actually, well, business partners, but we’re also brothers-in-law. So, our kids are cousins. Now, where do you want to get to the stage of that portfolio where we were handing it across to our kids and saying, ‘Here you go, the seven kids between the two families, you guys go and work out how you’re going to split this up between you’.
“So, Al and I thought, ‘Well, we’ll divest out of that portfolio now while we’re going to pay less tax and pull the money into our own, and go and do our own thing’. So, we thought it’s really poignant, and I’m getting people that really understand to pinpoint, because there is a lot of discussion about exit strategy or buying property. But when it comes to what happens down the track with property, no one can really crystallise it. So, we thought we’d try and get really pinpointed for you today.”
To listen to the full episode featuring Open Corp directors Cam McLellan and Matt Lewison, click here.