I've been involved in the property industry now for 18 years since 1998.
I bought my first investment property in 1999 and during that time, I've seen a lot of things.
I've helped a lot of investors across multiple states and I've also bought personally across
multiple states.
And one of the things that I often find interesting when I do speak to property investors, the
common complaints them say about their portfolio if they were to look at the rear view vision
mirror and maybe, you know that old saying, "If I can have my time again, I would do think
differently."
So I thought I woul d come out with a few and get our viewers to see if they can relate
to any of them.
The first one is without a shadow of a doubt is poor asset selection.
The amount of time I have had people just look back and go, "That hasn't perform, it
hasn't done well, I would have done something different, I would have bought something different".
I reckon is the number 1 complaint.
But to be honest, there's not a lot of independent information out there for property investors
to use as a guide.
Quite often they are out there on their own, trying to navigate through these waters and
try to determine themselves what actually make for a great investment.
But the biggest tip I can give you is for a lot of people they live in a home that's
not brand home.
Some people do but a lot of people live in an established property so the question is,
why if the majority of people are living in an established property, wouldn't it make
sense that you would invest in an asset class that is owned by a majority of people, owner
occupiers particularly but even the best investors I know are buying investment properties.
So if the number one complaint is poor asset selection my number one tip is buy established
properties rather than brand new because over a long period of time, I've seen that they
have a much a better performance than brand new properties.
Number 2 complaint is the white knuckle ride when it comes to cash flow.
They don't have a buffer in place and I think it's really important that people have a look
at their next six months worth of cost and have that set aside so that they can sleep
at night but also draw upon if an emergency happens that they haven't really planned for.
Because if you're really pushing the limit on lending, pushing the limit of the family
budget and buying an investment property from a position, in my view, from a position of
weakness, you are very vulnerable and the peace of mind that you would lack would be
a huge thing in your family life and in your enjoyment of life.
So my number 2 complaint would be not having an adequate buffer in place.
Number 3 is probably thinking that they are getting mentoring from someone but it actually
ends up being salesmanship.
By that I mean, people can often masquerade as a mentor and help them but they have an
agenda up and that agenda is, typically to pull out that stock list of property and say,
"Well based on the information I've given you, I think you are now ready to buy and
here's a couple of options that you should consider."
And to me that's not independent.
Therefore that mentor is not giving you that independent mentorship that your require.
And then when you go back to the number 1 complaint that is wrong asset selection, quite
often the stock list that they are buying, in my personal and professional view, is to
to be in inferior type of property.
So I guess the confusion between mentorship from salesmanship is another complaint that
I hear.
The another one is not maximising the tax that you can get back.
So we all know that if we buy an investment property and I make a paper loss, I can allocate
that paper loss against other income and make a tax deduction but quite often people think
that they just give that information to their accountant, they can maximise the amount of
deduction that you can get.
Make no mistake, accountants are great.
I'm a degree qualified accountant myself but they are not specialist when it comes to depreciation
and they are not specialist when it comes to your individual property.
Versus if you do get a quantity surveyor to visit your property and prepare a schedule
they can get not only all of fixtures and fittings but they can also work out the building
allowance if they are built post 1985 so you can maximise the amount of depreciation that
you can get.
Because don't forget it's a non-tax deduction, it's a deduction that is not coming out of
your pocket but you can put it on your tax return to help get a tax rebate back so if
you're not doing that, you're just letting thousands and thousands of dollars stay within
the taxation system rather than helping you support your portfolio.
The next common complaint I hear is people filling like they don't have anyone to talk
to or more importantly they treat property investing as a solo sport.
It's all about them.
We're conditioned by parents that you don't talk about money.
If you've got money problems, you keep it in-house and if you try to get ahead, if you
think about previous generations, they pay cash for everything, they don't borrow any
money so it makes sense that people have this solo sport mentality but even the best people
in the world who are tennis players, golfers, they still have coachers and they have a coaching
panel and mentors that they bounce off so that they can get a really good game.
So that is again, another complaint that I hear where they don't get optimal result because
they don't include enough people into the discussion to help them get the best out of
their portfolio.
Another complaint I often hear is people who has poor results through managing the property
themselves.
And I think this is a really critical thing that most people should try and avoid because
if you get a good property manager, they are well and truly worth the money that you invest
in having them look after the property.
Because they know the legislation, they know the rules, they know the laws but equally
they don't get cozy with the tenant and therefore they are very strict on payment and they are
very strict on the way the tenant can use your property.
I always say that the number one expense that you are going to have as a property investor
is a vacancy.
Now if you are getting on with your life and you've got kids and you've got a career and
you've got social activities and then all of a sudden you have this issue with a tenant
moving out, it's not really in your core focus and you have to drop everything to look after
it.
If you don't drop everything and look after it, you might have a longer than expected
vacancy so in my view, I think self property management is an error.
I think you should employ a good property manager and that's a topic for another day,
good vs bad property managers but if you employ a good property manager, they are well and
truly worth the cost of having them involved.
The last one that I like to sort of highlight is poor cash flow management.
That is a huge complaint.
It's usually when people haven't thought far enough into the horizon so if I'm in my early
30s and I've bought an investment property and I'm married for example, that's probably
a fair chance that we are planning on having children.
Therefore there is a fair chance that we are going to go down to one income for a period
of time before we go back into two income.
We then have to put in childcare, we have to put in obstetrician, we have to put in
future plans for schooling.
So if we haven't thought about these things in advance and we only treat the investment
in isolation, that could really lead people to really stumble in terms of their cash flow
management and I think it's not actually that hard.
If we work out what the big rocks are in our jar when we are in our 30s, there are certain
things that we probably are going to do in our 30s.
When we are in our 40s, there are certain things that we are going to do and so on.
If we actually front foot those and plan for them, chances are we can not panic and sell
in a position of weakness, we can actually find ways to thread through those periods
so that we can still hold the assets and then enjoy the fruits of the portfolio over time.
So this is just a few things that I commonly hear.
I rub shoulders with property investors all the time so those 7 things are common complaints
that I would hear.
Buying the wrong asset, having no buffer in place, confusing mentoring with salesmanship,
not maximising the tax deductions from getting a quantity surveyor report, treating property
investment as a solo sport, managing the property themselves and of course, the last one, having
poor cash flow management, they are consistent things that I see so, if people know those
things and they can plan to I guess, have a strategy around how they can counteract
that, they would have a better experience, build a better portfolio because ultimately
what we want to do it create a passive income so we can get our time back and we can create
more experiences in our life.
So those are just a few things for property investors to consider when they are looking
to buy their next property or continue to add to their portfolio.