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Good property investment strategies often zero in on the notion of detachment, but one expert highlights why attachment can in fact be beneficial.
OpenCorp director and co-founder Cam McLellan has spent decades learning about property and growing his own investment portfolio.
Through the years, the director has learned to view property as a “means to an end”, which ultimately allows him to enjoy more life choices and gives him that extra bit of legroom for decision-making.
“If rubber bands gave me strong cash flow and capital growth, well, I’d be an expert in rubber bands. So, property is just a means to an end. Some of the properties I haven’t even seen. My wife Felicity has seen probably 10 per cent of our portfolio, because it just comes down to numbers,” Mr McLellan said.
According to him, being emotionally detached from his assets has helped him ensure that objective decisions are made throughout his investment journey – from goal-setting to purchasing and then eventually managing the portfolio.
“There’s a very high proportion of people who purchase when they’re in their own postcode because they like the idea of driving past the property. But the reality is: what’s the chances out of the 10.4 million properties in Australia that the best one for you at that point in time happens to be around the area you live? It's a very low chance that that’s the best investment for you.
“When you look at it like that… getting your end goal set up there is really important. Take emotion out of property investing, focus on the figures and what it’s going to do for you financially, and then attach those end-to-end goals,” he added.
However, while it’s important to exercise detachment from the asset itself, and let the numbers do the talking, Mr McLellan opined that it’s critical for investors to, at all times, remain attached to the reason they got into property investing.
For OpenCorp director and co-founder Matt Lewison, it means “charting a path between where you are now and where you’re trying to get to” as opposed to just having aspirations of getting rich or retiring early.
Ultimately, this charted path will serve as the foundation for the strategies that the investor will implement throughout their investment journey, Mr Lewison said.
“There’s a really good reason why a lot of property investors only end up buying one property… Very few get a second and even fewer get a third. Those are the few who’ve got a plan, and they’ve worked on their game plan and they track and they see how they’re going and they refine what they’re doing over time.
“That’s the most critical thing before you buy a property: Get a plan. Those people that don’t have the plan just end up wandering off into the middle land of property investment and get lost and don’t achieve their goals,” he noted.
Aspirations versus goals
Mr McLellan defined aspirations as “a wishlist, like ‘I want to be a pro golfer’”, as opposed to goals, which “involve a set action plan or the steps you need to take to achieve them”.
Both directors advised investors to combine these two in order to succeed in property investing.
“So, I want to be a pro golfer. I’m going to go out and knock out 36 holes a day and get a professional coach, follow a training plan, so I can get there.
“People don’t seem to have that same strategy when it comes to investing. It’s just, ‘I'll go down to the auction, put a bid up, and there’s my investment property’,” according to Mr McLellan.
“So, ‘I want to retire young and retire rich’, that’s not a goal. That’s just the aspiration… The goal needs to have some metrics around it. How much income do you need or how much equity in order to be able to retire? When do you want to do it by?” Mr Lewison added.
At the end of the day, the directors stressed, aspirations will get investors out of bed in the morning, but the systems and processes established based on their short-, medium- and long-term goals will get them through the years it takes to reap the benefits of property investing.