Invest
5 habits of successful property investors
What makes a property investor successful? Aussie Parramatta’s Ross Le Quesne lists down five habits of investors who have built impressive portfolios with more than 10 properties.
5 habits of successful property investors
What makes a property investor successful? Aussie Parramatta’s Ross Le Quesne lists down five habits of investors who have built impressive portfolios with more than 10 properties.
Years of working as a mortgage broker dealing mostly with owner-occupied properties, Mr Le Quesne has had the privilege of servicing investors who have acquired as much as 50 properties over the course of their wealth-creation journey.
What are the habits that differentiate investors with massive portfolios from those who have only succeeded in purchasing and maintaining a couple of investment properties?
1. Understand the fundamentals
Successful investors, first and foremost, familiarise themselves with the most basic fundamentals of investing in properties, according to Mr Le Quesne.
“It comes down to your ability to hold the property, which comes down to cash flow,” he said.
By knowing the do’s and don’ts, as well as the factors that influence growth, investors are likely to succeed in asset selection, which is deemed as one of the most critical parts of the investment process.
Mr Le Quesne said: “You can have one property that takes all your negative cash flow or you can have 10 properties that takes that same amount of negative cash flow – it is one of the fundamentals.”
“That’s a leveraging get off smart cash flow management.”
2. Balance cash flow and yield
To be able to maintain cash flow, investors are advised to be wary of their rental yield.
Striking a good balance between the two is one of the most important secrets to success in the business of creating wealth through property, the mortgage broker highlighted.
“Successful investors understand how much negative cash flow they can afford from a month-to-month basis, and they balance that,” he said.
3. They use a ‘strategic point of view’
Since getting finance for property investment has become harder due to several socioeconomic factors, smart investors always make it a point to “strategise” in order to maintain good serviceability and borrowing capacity.
“They’ll take on strategies like ‘Where in my portfolio can I add a granny flat that’s going to increase my cash flow and increase my serviceability?’” according to Mr Le Quesne.
“They’ll look at it from a strategic point of view and think differently around that so that you can look after your cash flow.”
Therefore, he strongly encouraged investors to be active participants in their journey, as in manage and review their rents and finances on a regular basis with the help of professionals, where appropriate.
They should also pay attention to interest rates, which could be volatile and ultimately influence the cost of maintaining the property and fulfilling loan obligations.
Mr Le Quesne advised “shopping around” for the right lender in order to maximise finances.
“You might be paying 5 per cent on your interest-only investment loan, but with that same lender, you can get a fixed rate at 4.2 per cent. What’s the difference of a 0.8 per cent over $1 million on your portfolio? It’s $8,000 a year in cash flow,” he said.
“Successful investors are looking at things like that to really manage their cash flow… We say ‘cash flow is king’. It’s about having those buffers.”
4. They look at the bigger picture
Successful investors don’t just stick to one strategy because they know that there is no such thing as a “foolproof strategy” in a venture as unpredictable as property investment.
In fact, focusing on just one strategy can limit the opportunities you get on the field, according to Mr Le Quesne.
Instead, investors should strive to be open about the ever-changing situation in the market – analyse it based on their goals, capabilities and limitations as an investor and take a long-term view when making financial decisions.
According to the mortgage broker: “Looking at the bigger picture [is important] as well. Sometimes, people are focused on ‘I only want to deal with a big four bank’, which limits their ability to grow a portfolio.”
“The asset selection around cash flow and having all these other factors in to really managing your cash flow to hold property long term [are] really important.”
5. They have a good team of professionals around them
Finally, successful property investors will attest to the incredible value added by a dependable financial team to their portfolio.
A team of buyer’s agents, accountants, and other property professionals help them assess their goals and determine the next best step to take in order to achieve them.
“We sort of look at where you’re going and what you’re doing, and I think that’s key. The mistakes that the not-so-good investors make is simply buying the wrong property,” Mr Le Quesne concluded.
Read more on property investors here.
Property
Rental vacancy rates rise in east-coast CBDs
Vacancy rates nationally remained stable during the month of September. ...Read more
Property
A first home buyer with cold feet? Here are your options
Even first home buyers can get cold feet about stepping onto the property ladder. ...Read more
Property
Demand for affordable housing set to rise
New lending rules introduced by APRA could increase the demand for units and townhouses. ...Read more
Property
Victoria launches $500m fund for home buyers
The Victorian state government has launched a new scheme that promises to make life easier for first-time home buyers. ...Read more
Property
Value of housing outstrips $9 trillion
Five, short months after hitting $8 trillion, the total value of residential real estate in Australia has surpassed a new record of $9.1 trillion. ...Read more
Property
Over 50,000 Australians sign up for government home buyer schemes
The federal government has provided an update on its Home Guarantee Scheme for first home buyers and single parents. ...Read more
Property
How first-time home buyers can play to their strengths
First home buyers face an uphill battle, but that’s not to say they can’t be smart about it. ...Read more
Property
Spring in newly listed properties in September
Nearly 74,000 new listings were recorded last month, a rise of almost 12 per cent compared to August. ...Read more
APRA’s mortgage crackdown, the power of DeFi and last-minute tax tips
Listen now
What to expect as the end of lockdown looms? Will the Stage 2 tax cuts boost your tax return? Where should investors be looking as the economy reopens?
Listen now
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
What does the NSW regional permit mean for property investors? Who really wins from the BHP-Woodside merger?
Listen now
Property
Rental vacancy rates rise in east-coast CBDs
Vacancy rates nationally remained stable during the month of September. ...Read more
Property
A first home buyer with cold feet? Here are your options
Even first home buyers can get cold feet about stepping onto the property ladder. ...Read more
Property
Demand for affordable housing set to rise
New lending rules introduced by APRA could increase the demand for units and townhouses. ...Read more
Property
Victoria launches $500m fund for home buyers
The Victorian state government has launched a new scheme that promises to make life easier for first-time home buyers. ...Read more
Property
Value of housing outstrips $9 trillion
Five, short months after hitting $8 trillion, the total value of residential real estate in Australia has surpassed a new record of $9.1 trillion. ...Read more
Property
Over 50,000 Australians sign up for government home buyer schemes
The federal government has provided an update on its Home Guarantee Scheme for first home buyers and single parents. ...Read more
Property
How first-time home buyers can play to their strengths
First home buyers face an uphill battle, but that’s not to say they can’t be smart about it. ...Read more
Property
Spring in newly listed properties in September
Nearly 74,000 new listings were recorded last month, a rise of almost 12 per cent compared to August. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
