The richest 1% of our population owns over half of the world’s wealth, and much of these fortunes has been derived from smart and successful property investments. Thanks to the Forbes Rich List we can clearly identify the wealth of those real estate barons across the globe. Here are just a few from the Forbes Rich List:
- Wang Jianlin – $28.7 billion
- Donald Bren – $15.1 billion
- Stephen Ross – $12 billion
- Donald Trump – $4 billion
It’s clear that a sound financial strategy in building your own property portfolio can be an excellent strategy to grow your wealth, but how can we mirror the behaviour of those who’ve already made it. In this week’s article we explore the top characteristics of successful property investors to determine what they’re doing that we’re not.
1. They optimise their loan structures
One of the most common mistakes that property investors can make is simply targeting the lowest interest rate without any consideration for the features and functionality of the loan itself. This could include offset accounts, early repayment, redraw facilities, substitution of security options and a wide range of other factors. It’s important to consider how your loan structures are aligned to your overall financing strategy.
2. They protect their assets
Most of us can recognise that things will often go wrong when we least expect it, but how often do we actually factor this into our financial plans and ensure we have the right risk management tools in place. Successful property investors are considering all areas of personal protection including income protection, life and disability insurance and trauma cover, to ensure that if they are unable to work or the unforeseen does take place that their property empire is not wiped out in the process.
Another key activity of the successful property investors is to regularly review their insurance policies, generally on an annual basis. They will review whether the levels of cover are still appropriate, whether they’re still getting the best value policy and if they should be making any changes.
3. They continually monitor and review their portfolio
Hopefully when we first make an investment we will do our homework on the area, including the demographics, infrastructure development and other factors to determine whether we consider it to be a worthwhile investment. While this is common sense to a lot of us, how many are continuing to review these factors within their portfolio once they’ve already bought the asset. For many property investors who are just getting started, once they’ve made the investment they consider that their job is done, however the successful investors will continue to monitor these factors to assess whether they have made the right call or if changes should be made.
4. They have a smart team around them
Successful property investors, just like successful business owners, recognise the power and value of being surrounded by the right people. This will include their investment-savvy mortgage broker, their property accountant, quantity surveyor, solicitor, property valuer, property manager, insurance broker and/or financial planner and in many cases their property mentor. As the saying goes, ‘your net worth will be determined by your network’, so ensure that you’re surrounding yourself with people who are smarter than you and can assist in achieving your financial goals.
5. They have a plan
When it comes to achieving success, it is often the simplest factors that are the most commonly overlooked. All successful property investors have a plan in place outlining exactly what they want to achieve and how they plan to get there. Many studies have shown that as little as 1% of Australian professionals have a plan in place outlining their financial goals. This highlights a common saying, that ‘if you don’t know where you’re going, any road will get you there’. Whether you outline your plan with your financial planner, significant other, mentor or all of the above, ensure that you have a plan in place so that you can significantly increase the likelihood of achieving your own financial goals.
LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.
Book a obligation-free, complimentary consultation here today.
LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.