Due to varying factors, only a small percentage of property investors in Australia are able to go past the one- to two-property mark. What are the secrets of successful multi-property portfolio owners?
For Right Property Group’s Victor Kumar, who has embarked on an 18-year property investment journey and has built a career as a buyer’s agent, preparation is one of the most important keys to a successful long-term property investment journey.
Going from one property to 20 over a period of time may seem like a great feat for many, but it would not be too hard for anyone who is driven by passion, according to him.
Over the years, he has identified three vital steps to growing an impressive multi-property portfolio.
Simply being surrounded by investors who are driven to continuously grow their portfolio could make a difference in an investor’s wealth-creation journey, Mr Kumar said.
“Get away from your current environment if your current environment does not support multiple property ownership,” the buyer’s agent highlighted.
“If you want to be a prolific investor, you need to go to networking functions and stuff where you can rub shoulders with people you want to be like. That’s the very first thing – you need to have the right mindset.”
Good investors are also able to set short- to long-term goals, and are willing to make realistic adjustments based on life changes and the current movements of the market, according to Mr Kumar.
An investor whose end goals are always clear on his mind will find it easier to lay out strategies that can minimise risks and ultimately lead them to success.
The buyer’s agent said: “Why are you doing this? Make that ‘why’ really, really count because if the ‘why’ is clear enough, then the ‘how’ will happen by itself… You need to focus on what you are trying to achieve in one year, three years, five years, and 10 years in your portfolio.”
“You know that in the initial stages, what will happen is you will have an element of negative cash flow regardless of what type of property you buy… You need to look at how much of the negative cash flow you can sustain and whether it will have an impact on your lifestyle or not.”
More often than not, investors who were not prepared for the initial financial “pain” during the beginning of a property investment journey are discouraged to continue, thus never being able to surpass the one- to two-property mark.
“That’s what slows people down – if investing starts impacting on lifestyle, obviously, a part of you will say, ‘No. Let’s slow down. It’s not pleasurable.’ We try and shy away from pain, but property investment causes pain, so we stop,” Mr Kumar said.
Finally, Mr Kumar advised investors to learn to choose the type of property they buy based on their own skill set instead of simply following trends.
Matching their investment properties with their capabilities and limitations, along with their goals, will help investors manage them well over the long term since they are clear about the role that each property will play in their wealth-creation journey – whether to maintain cash flow or spur capital growth.
“We need to work out what type of property are we buying to match our own skill set. If you’re a good renovator, you’d buy properties that you could renovate. If you’re time-poor, you’d buy properties that you could get other people to renovate… or just buy properties that don’t need renovation,” Mr Kumar concluded.
“If you map out those simple things, you’ll find that it starts unfolding. You have to look at it on a weekly basis to say, ‘Where am I heading with this?’”