15 October 2019

Gaining the mindset of a successful investor

Adrian Atelj
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Have you ever read about the 24-year-old on an average salary who owns six investment properties? Or the single mum who bought her first property out of desperation for a better life and ended up with a $10 million portfolio? Mindset is often the only difference between them and you.

Data from the Australian Tax Office shows more than 1.2 million people own investment properties but 70% of them only own one. By comparison, the number of investors with five properties is less than 14,000.

RUN Property is Australia’s largest metropolitan real estate agency managing properties valued at more than $10 billion. Surveys of their database show investors own an average 1.2 properties each.

Despite more than 90% of investors saying they thought property was a good investment, most have been unable to expand their portfolio. Why?

Here’s how to create a successful investor’s mindset.

Create a burning desire

Whether you are an aspiring Olympic athlete, a businessperson or a property investor, desire is an imperative ingredient to success.

If you are comfortable in life with a fair paying job and food on the table, it can be difficult to create a strong desire for investing, particularly as it usually requires some financial sacrifice.

Many successful investors will tell you that their desire came from a need to urgently generate more money. They might have hated their 9 to 5 job and wanted a new way to earn an income. They might have gone through a terrible divorce and had to start again on their own.

The first and most important step in setting a path to investing success is to determine what will fuel your desire. You must be able to clearly visualise and describe what success looks like for you and not let go of that picture.

Get a mentor and support network

A professional property mentor, or simply someone you know who has been successful with investing, can keep you focused on your goals. Make sure they understand what is driving your desire and how you want to measure your investing success. Your mentor will also need to be able to get tough with you if you veer off course.

Develop a plan

To fail to plan is to plan to fail.

More than 1.2 million Australians are investing in property, yet many of them are ‘accidental investors’. For example, they might have inherited a property or their spouse happened to have one.

There is nothing wrong with being an accidental investor. In fact, it can be a great opportunity to turn one property into many more. Either way, you need a plan to achieve your investing goals.

The plan needs to cover:

  • What is your current reality? (i.e. what is your current net wealth, passive cash flow, lifestyle and how much time is devoted to the various aspects of your life?)
  • What is your desired outcome? (i.e. what is your desired net wealth, passive cash flow, lifestyle?)
  • What actions do you need to take to move from your current reality to your desired reality? These need to be specific, measurable, realistic and set against timeframes
  • How are you going to measure and report on your investing success?
  • What support, education and resources do you need to execute your plan?

Enliven your strategy

“Investors with large portfolios follow their investing strategy meticulously,” said homes.com.au Founder & Managing Director, Pat Carbone.

“Some go for capital growth properties and others prefer positive cash flow or a blend of both. Whatever your approach, stick to it.”

Buy on mathematics, not emotion. Do the numbers on each potential investment and be prepared to walk away if the property does not match your criteria.

Learn from your mistakes. Consider them not as a cost but as an investment in your future success. Be determined to make up for mistakes with future decisions that will more than compensate for the earlier failure.

View finance as a tool, not a burden. The ability to leverage equity will help you maximise your investing success.

Aim to hold your properties long term for the best capital growth. Consider renovating, when appropriate, to add value.

Get off the couch and take action

Set some time aside each week to focus on your property investing activities. Ensure you block out this time in your diary. If something totally unavoidable comes up, make sure you reschedule. View property investing like a business, not a hobby.

The only person who can create the life you want is you. Gaining the mindset of a successful investor requires courage, research, a well-structured plan and plain hard work.

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