Before researching suburbs, property types and even wealth-creation potential, budding investors are strongly encouraged to answer one important question – why are you investing?
Pure Property Investment’s Paul Glossop believes that goal-setting plays an important part in every property investor’s success in the business of wealth-creation. In fact, as an investor, he has made it a point to set goals before even doing market research or crafting a strategy.
Goals, after all, will be the foundation of the entire investment journey, according to him.
“Every investor will be completely different to the next, so you have to find out who you are first, find out what drives you, find out what you need. From there, you can utilize research and professional guidance to actually get you to that place,” Mr Glossop said.
How exactly does one set goals for property investment?
According to Mr Glossop, it’s simply about knowing where you are right now and where you want to go.
Once the ‘why’ of investing is determined, it’s only a matter of laying out the ‘how’ through research and with the help of property professionals, where appropriate.
“It’s about having a clear set end goal, then building a team and understanding where you want to get to over the long-term.”
“You might not know it in the beginning, because most 25, 30, 35 year olds don’t necessarily know where they want to get to. They only know what they need to live their lives the way they want at that point in time, but that’s already a good starting point.”
“You might not know what makes you happy until you’re 45, 55, and that might change as you get older, but knowing where you are personally and financially and what you need right now is key. If you don’t have that, then you don’t really know why you’re trying to do things,” Mr Glossop highlighted.
Having a clear goal also helps investors stay on their course, which is important when creating wealth through long-term avenues like property investment.
As a property advisor, Mr Glossop has had his fair share of clients who had the urge to sell their property the moment they don’t get their desired results – a mistake that may ultimately be detrimental to the overall growth of their portfolio.
According to him: “My clients live in Melbourne and they've got an investment in Melbourne and Brisbane, so we're looking at a third investment. One of their investments had performed extremely well while the other one's around three or four percent above where we secured a year ago.”
“For them, that was not necessarily a result and they were getting a little bit anxious and thinking that, ‘Maybe we should sell it.’ They're literally only a year in. While that could work in some cases, it comes down to why they actually bought the property. We had to revisit their goals and go back to what their objective is.”
“We need people to stay the course, and that’s going to be hard if you don't have a reason why you're doing this – a 20- or 30-year objective. Without it, you end up finding yourself in a crossroad and your solution is, ‘The property is cash flow negative and it hasn’t gone up to the level that I thought it was going to go, so my decision now is exit.’”
At the end of the day, being able to understand the reason behind investing allows investors to make more informed decisions throughout their wealth-creation journey. Without a specific goal or objective, it could be hard to determine how a property or a strategy could work for them.
“You can’t look at a particular opportunity or understand how an asset might work unless you actually know where it fits within your investment journey. Unless you really know where you’re going, you can’t find the assets that’s going to be part of that story that will ultimately get you there," Mr Glossop concluded.