Do you have a family member or friend who you thought was a property mogul with 5 or more properties? Have you ever wondered how they’ve achieved this?
You first thought was probably “he must have had a big inheritance,” or “If only I had rich parents.” You might be right, you might not be. But the fact is everyone had to start from somewhere.
And how did they start? It all started in their mind.
Data from the ATO shows more than 1.8 million Australian owns one investment property, but the figure for investors who owns five properties drops dramatically to less than 15,000. Have you ever wondered why most property investors never get past their first property investment, while only a small group of property investors are able to use properties as a vehicle to achieving financial independence?
Mindset is the first and most important factor I believe in achieving success in property investing. Like pursuing any worthwhile cause, if you want to get ahead of the pack, you will need to have a different mentality from the pack.
Here are 10 steps you can take to train yourself to have an investor mindset
1. Find the 'Why': Find your reason for wanting to invest, money is great and everyone wants more, but what is the burning desire that makes you want to change your current circumstances. Whether you are motivated by a 9 to 5 job that you despise, the need to pick yourself up after a failed marriage or relationship, or wanting to retire with more than the bare minimum, successful investors with large property portfolios either had or created a desire to achieve greatness. Aim high and clearly visualise what success will look like. as with every epic journey, the road ahead is never a straight path; you need to refer back to that underlying reason to keep yourself motivated when the going gets tough.
2. Goal setting: Sit down and plan out what you want to achieve between now and retirement, be as specific as you can and don’t be afraid to dream big. Do you enjoy what you do and want to work 3 days a week in 10 years time and have 50k passive income from properties? Or you hate your job so much you want to retire in 2 years time with 100k passive income? Once you have a goal in mind you can start to work backwards. Take your dreams of becoming a successful investor seriously so they become reality.
3. Develop your investment plan: With the assistance of an expert such as a mortgage broker that understands property investing and the complexity that goes into maximising your borrowing capacity and building a large portfolio; Start to plan out a strategy around the goals you’ve set. As you can imagine, the strategy employed to achieve 100k passive income in 20 years is drastically different from achieving 100k passive income in just 2 years. An expert can help map out your investment journey to ensure you achieve your investment goals with the least amount of time possible, at an involvement and risk level that fits in with your circumstances.
4. Self education: There is a wealth of information available on property investing on the internet. Attend seminars and workshops where you can connect with like-minded investors. Surround yourself with a great team of people who you can rely on to bounce ideas of one another is so much better than doing it on your own. Just do your due diligence and be wary of spruikers! There are plenty in every industry and in properties it is no different.
5. Making sacrifices: Those with investor mindset are willing to make short term sacrifices for long term results. In other words, they prioritise investing over spending. The beauty of investing is the compound effect. You play now and pay later; or you pay now, and play later (with compounding effect). Remember, there are no shortcuts to any place worth going.
“There are no shortcuts to any place worth going.
- Beverly Sills"
6. Emotions in investing: Removing emotions from investment decisions is critical if you are going to make logical and objective decisions. Just because you don’t like timber floorboards does not mean your future tenant will not also. It is critical to not get emotionally attached to your investments, which can cloud your judgement.
7. Think outside the box: Too often new investors look in their neighbourhood for their first investment. “I know the area, I’m happy to live here, I am sure everyone else does also.” Australia is a big place, investing in your backyard is likely not to be the best choice for your investment strategy. Investing interstate also allows you to enter an otherwise unaffordable market such as Inner West Sydney, or to provide diversity to your investment portfolio.
8. Learn to filter out the good advice from the bad: Using an example from “The richest man in Babylon”, don’t take advice from a sheep herder when buying jewellry. There will always be naysayers who try to discourage or criticise your investment decisions, some might even come from close friends or family. While they mean well, they are likely not well informed. Don’t let those 'dream killers' persuade you to give up on your goals and dreams. Associate yourself with other like-minded investors who will support and guide you through your journey.
9. Analysis Paralysis: Due diligence is important, but over analyses can also be detrimental. Some people are often caught up with making their first investment the perfect one; they research properties endlessly and soon become overwhelmed with all the decisions, and end up giving up in frustration, which brings to my last point...
10. The Art of the start: The best part about property investing is time heals all. What you really need to do is begin by TAKING ACTION TODAY!