How to be in the top 1% of investors and avoid getting ‘stuck’

It is a sad fact that most property investors will never achieve the results they want in their lives - so what mistakes are they making?

todd polke

Blogger: Todd Polke, property investment head coach, Positive Real Estate

Here is a key mistake most investors make in the property market.

It is a sad fact that 99 per cent of property investors will never achieve the results they want in their lives. Many start out on an investment journey with so much hope and expectation to create a better life for themselves with more choices, but sadly those dreams often remain unfulfilled.

There are many reasons for this, and I could fill a book with the mistakes the majority of investors make. However, some mistakes are much worse than others. The obvious one is a lack of knowledge and education. The other is not so obvious and requires a lot more thought and solid base of knowledge to start with.

Some investors do manage to buy investment property number one, two or three, but then they tend to become ‘stuck’. Whether that is due to servicing issues, cash flow issues, inability to continue raising deposits, poor structuring, poor investment choices – the list goes on – they are unable to keep moving forward.

It is rare for an investor to purchase beyond property number two or three. In fact, if you have your name on the title of two or more investment properties, you are now in the top 2 per cent of the entire population! At this level (for most people) financial freedom still remains a pipe dream and they continue on, tied to their jobs and relying on their superannuation for retirement.

All of the issues I mentioned above are the symptoms of the major problem people encounter on their investment journey, which is a lack of strategy. After coaching thousands of investors one-on-one, and speaking to thousands more across Australia and New Zealand, I have discovered that most investors strategies is – “buy and …” No, not buy and hold. It is “Buy and Hope!”

They buy a property, cross their fingers and hope it goes up in value! Maybe it does and maybe it doesn’t, but just purchasing good deals isn’t a guarantee of a becoming a successful investor. These investors haven’t considered all of the other factors in the equation, and the major sticking points in most people’s portfolios. Their view is to short sighted. To be a successful investor you cannot just consider what your next deal will be and ignore the bigger picture.
Whenever I’m working with clients on a strategy, I consider not only the current deal but their future deals as well. For every property deal I recommend, I always have the next two deals – at least – in mind and am always considering how the current deal will impact their portfolio in three to five years. I also reflect on the purpose the deal is actually serving for their overall wealth creation strategy.

Here is the key to remember: always buy a property with the next two property deals in mind. Ask yourself the following questions:

1.    How is this deal going to help me get the next five properties in my portfolio?
2.    How could it hold my back on my journey?
3.    Is this the most effective use of my money, at this point in time?
4.    What is the outcome I  expect from this property?
5.    What is the purpose of this property in my portfolio right now? Is that purpose going to change moving into the future?

Remember those sticking points I was talking about above?
•    Serviceability
•    Cash flow
•    Raising deposits year after year
•    Finance structuring
•    Poor investment choices

For each property you buy, you have to be thinking how that property is going to help you move past these sticking points for the next deal or two, and then into the future.

Unfortunately, most people (unless you have spent a lot of time in the market yourself and are researching constantly) simply don’t have the knowledge or expertise to put this into practise. It is necessary to get educated to advance your property portfolio!

A mentor is vital for you, if you are serious about achieving some amazing results as a property investor and moving into the 1% of investors who actually succeed in the investment world, achieving the results and choices they yearn for.

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