Property investing: The secret to success is treating the property as a business

Property investing: The secret to success is treating the property as a business

How many people have you seen walk around saying property investing is easy but they are maxed out with the banks and can't buy anymore. How many experts do you see, saying that property location is the only strategy you need when investing in property. How many experts tell you all you need is your property to grow in value, rip the equity, get positive cashflow rent and buy again. So why doesn't everyone have 10 plus properties like me and do it in a time frame of only 3 small years?

What if I told you this is not how you build a property portfolio.

These are all important factors but they are not the be-all and end-all when it comes to building a property portfolio. You need to understand when building a portfolio quickly there are so many factors that actually attribute to the portfolio. If you cant get lent anymore your not going to move forward, are you?

So why do there appear to be so many experts out there saying the wrong information but they have a lot of properties themselves? Maybe they don't even have a lot of properties and are just saying what other experts say. Maybe their wage is huge and has the capacity to buy a lot which is completely different to the average person. 1st of all you need to completely understand how they got there in the 1st place and if they are actually there or say they are there. Anyone can buy a few properties and wait 20 years to succeed, are you happy to wait 20 years?

Are they high-income earners with a lot of disposable cash where they purchase for the sake of it thinking it's for tax diversion? Are they buying negative cash flow properties that are in poor locations with the thought that capital cities always rise in price? This is the most popular strategy but the problem with this strategy is, that you're buying a dud. You are buying something that people don't want and on top of that, you're paying someone to live in it.

Anyone can buy property

The sad thing about property investing is there are very few actual experts out there, but everyone and their dog will have an opinion on what you should do. The interesting thing is, that anyone can buy property. You don't need to be an expert to do it to buy a property but to build an empire you need to understand how to buy property like a business. So why do most people fail to build property portfolios where they can retire.

Why is this? Because it's not easy and if it was everyone would be doing it and succeeding. You need a very strong way to do this. What if I told you the total secret behind investing in property is to treat it like a business. But what do I mean about treating property as a business, While looking at ROI (return on investment), data analytics, feasibility and due diligence are important, these are not the only factors that make the business successful.

You need to understand you're in the business of buying property, not just properties. When I say this most people scratch their heads but let me explain. What if I told you even the banks work on liability and risk which is completely different to the way 99% of mortgage brokers explain banks. Banks will lend you as much money as they feel comfortable with and that is completely different to what the mortgage broker says. But I'm maxed out, what if there was a way to fix your scenario.

Mindset is key, knowledge is power, risk is based on knowledge

You need to change your mindset when it comes to buying property as an investment. You're not just buying a roof over someone's head, you're buying an appreciating asset that will make you money. To do this you need to understand how to buy property for investment purposes, not just because you can afford the repayments, and not because you think you are saving on tax. This is where most people fail, they enter into an investment without a clear understanding.

The biggest barrier to entry when it comes to property investing is not having the required knowledge. Knowledge is power, and with the right knowledge, you can take calculated risks. But without the required knowledge, you're just gambling. And the thing about gambling is that eventually, the house always wins.

So how do you get started on your property investing journey? The first step is to educate yourself. Buying a property is easy, finding good tenants is hard, having a system and process in place is harder still and making sure your managers or property managers follow the system is even harder. So you need to understand that when you're buying a property, you're not just buying a house or an investment, you are buying a business.

What if I told you there is a way to buy a property?

A business has staff, customers (tenants), products (the property itself) and most importantly, a system. The system is what makes the business run smoothly and without it, the business will fail. So how do you buy a property like a business? Isn't that just buying a property and renting it to earn money? No, it's much more than that.

Why or how could I buy property differently you ask?

Simple, I understand that when you buy a property you're not just buying a house or an investment, you are buying a business. This is the fundamental difference between me and 99% of investors. I understand that to be successful in property investing, you need to treat the property as a business. It's like the difference between a sole trader (you) vs a company (a separate entity).

A sole trader is someone who owns an unincorporated business by themselves. This means that they are personally liable for any debts and obligations incurred by the business. A company, on the other hand, is a separate legal entity to its shareholders. This means that the shareholders are not personally liable for the debts of the company.

But what relevance does that have to do when you invest in property if I want to be successful?

I'm glad you asked. This has absolutely everything to do with it. You see, when you buy a property in your own name, you are buying it as a sole trader. This means that if the property was to go into default, the banks could come after your personal assets to recoup their losses. However, if you were to buy the property in a company name, the banks could mean they can not come after your personal assets. This is because the company is a separate legal entity from you. The only thing the banks could go after is the property itself. So, buying a property in a company name could give you asset protection from the outset. This is an extremely important consideration when buying an investment property.

I'm not saying buy in a company or your personal name but there is so much to learn about where you could actually go in the property space if you had a clear understanding of the benefits of doing A vs B.

For example, if you wanted to buy 10 properties in one year, would it make sense to do it in your personal name? No, because you would be taking on all the risk yourself. However, if you were to buy those same 10 properties in a company name, you would be spreading the risk across 10 different companies. This would minimize your risk significantly.

But I can't buy 10 properties a year, it's impossible. But what if it wasn't.??

One of the biggest things you see most successful business owners do is have a mentor, let's not confuse a coach or a mentor. A mentor is defined as an experienced and trusted adviser. Someone who has been there, done that and got the t-shirt. A coach on the other hand is someone who will help you get from where you are to where you want to be but they have not necessarily been there themselves. A mentor will help you shortcut your learning curve by years sometimes decades. So, if you're serious about becoming successful in property investing, find yourself a mentor.

I'm an experienced property investor, I don't need you help.

That's great! But I'm sure there are things you don't know about investing in property. And that's ok because no one knows everything. I still have a mentor myself, because there is always something new to learn. The key is to never stop learning and to always be open to new ideas. And a question, do you know the secrets behind lending. Because if you don't know how to get the money, you can't keep buying property regardless of what you earn.

Some people reading this will say "I don't have the money to buy 10 properties a year", or "I'm not experienced enough". And that's fine. You can start small, it's not about buying 10 a year. I built my whole empire only with my 1st deposit. Building an empire is about how many properties you buy a year but making sure they're of value and sustainable. Remember the words "value and sustainable", you'll need those later.

Sustainable properties are the key to having a successful property portfolio that will stand the test of time. Value Properties are the key to making sure you don't overpay for a property and that you're getting the most bang for your buck.

Thanks for reading, there are so many key points I could talk about but we would be here all day. If you want to learn more, I suggest you find a mentor in the property space and they will help you on your journey to becoming a successful property investor and believe me, they're far from near. Don't hesitate to reach out either, I'm passionate about helping people achieve their dreams.

Until next time,

Your future property mentor.