7 Rules for Property Investing

Rule 1 - more than 100 units. If you're buying less than 100 units at a time, you're never going to create dependable income. Economies of scale only kick in when you buy more than 100 units. Stretch yourself to figure out how to do it. Find partners, source better deals, find a loan guarantor partner if you're not strong enough, but stop learning in the small deals and start making money in the big deals.

Rule 2 - Stop buying houses. 1 Property at a time isn't going to get you to where you need to be. Also, if that 1 tenant doesn't pay, your income disappears and usually you end up paying in. You want a broad base of diversified tenants. Even if you have a small piece of a bigger pie, it's better than having a really small pie all to yourself.

Rule 3 - Hire great management. You can't grow if you're trying to manage everything yourself. Also, when you start playing in the big deals with 200+ units, you WANT management. You definitely don't want to be taking all those calls from tenants. Even better, the economics work really well on 200+ units at a time, where you have enough cashflow from the project to pay quality people. Paying 10% of the income and a placement fee to single-family home managers is ridiculous in comparison to the professionalism you can buy for 3-5% of income when in much bigger deals.

Rule 4 - Get interest-only debt whenever you can. The lower the repayment, the higher the cashflow. Remember that.

Rule 5 - Inspect the property! Hire 3rd party professional inspectors to find faults. They're great negotiation points and it's proper due diligence to reduce risk. Something is going to bite you in the arse if you don't inspect the property properly.

Rule 6 - Buy existing properties. Much easier to analyse than a future vision of a development! I love developments because we're taking nothing and turning it into something, but if you want consistent cashflow, buy existing assets!

Rule 7 - Cashflow is everything. If you can't create positive cashflow and you're hoping that the capital appreciation is where you're going to make money, be very careful!