I think when you’re focusing on “more” and that you’re not focusing on the quality of the property. And I actually think that often you can achieve “more” with “less”.
Hi it’s Bernadette! And I’ve got another tip today around investing. A lot of people think about the quality of their portfolio in terms of how many properties they’ve got – the quantity of properties they’ve got. And I’d actually like to offer you another way of thinking because I actually think that thinking’s flawed, and the reason being because I see and I talk to a lot of people who have quite a few investment properties and none of them are really getting them to where they want to be. They’re not performing in the way that they’d like to and I have a theory about that.
I think when you’re focusing on “more” and that you’re not focusing on the quality of the property. And I actually think that often you can achieve “more” with “less”. Now what is quality? You might think it’s the tax and structure and floor coverings and the tiles and all that – absolutely not! As renovators we are well equipped to produce that ourselves. What I mean by quality is:
First: Quality location as in location, location, location!
Second: Quality and potential. What can you do with that property other than sitting around waiting for organic
growth to improve the equity in it and to improve the yield? That’s a quality property.
One – good location;
Two – opportunity to improve equity;
Three – opportunity to improve yield.
So what do I mean by that? A lot of people think for their first property is they’ll buy a little unit. And the problem with a little unit is yes you can juice it up with the cosmetic reno but that’s pretty much it. Then you just feel sit around and wait for the market to grow and often it’s never done. Buying a new unit off the plan is even worse because you can’t even have the renovation to it, you’re paying top dollar when you buy it and big commissions so you’re behind the eight ball before you start. What I think is a good quality property is something that is on a bit of land where you can renovate the property and improve it and get a higher yield for in the beginning and later on when it’s grown in value you can use some of that value to maybe subdivide a blocker land and get yourself a second property.
Now it costs a lot to get into a property but it pays stamp duty, legal all that sort of things and if you can do pay that once and get two properties out of it – and that’s just one example I should add there’s lots of ways to buy potential – and then in the long run you are going to be in a much stronger position and you’re going to have a lot more equity in that property from the outset. I hope that’s helpful!
See you there!