MAKING MONEY THROUGH PROPERTY
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Articles by The Professional Trustee Team
It's no secret … people can make a lot of money through buying and owning property. But like all investments, get it wrong and you can lose your shirt, tie and pants. Yep … a trip down Brokesville Lane is a very real possibility. To avoid taking this jaunt you need to ask yourself some upfront questions. Get clear with your answers and you'll be well on your way to making a sound investment.
W1 - Why?
The mistakes we make in life can frequently be traced back to one single moment in time. This is particularly so when it comes to losing money on property. The mistake starts with failing to take a moment to consider what you are actually trying to achieve. Therefore, the first question you need to ask yourself is, "Why am I going to buy a property?" Are you trying to achieve capital gain, cash flow or both? Do you want to buy a mousetrap pad to live in yourself? Is it a home you're after? If so, what factors are important to you? For example, is convenience to work more important than any other factor on your wish list? Alternatively, are you trying to build up your personal wealth by purchasing a property? If so, are you intending to rent this property out to gain some rental income? Or are you going to buy a property, renovate it and then on-sell it to make some money? Whatever your objectives, the point is you need to be very clear on what you are endeavouring to achieve.
W2 - When?
A pivotal question that needs to be asked and answered before you embark on your property owning journey is, "When should I buy?"
Like a lot of things in life, there are property seasons. Most people when they first start out in property either aren't aware of these seasons, or they interpret their data incorrectly and get their seasons mixed up. This leads them to making the mistake of buying when the market is very hot and selling when the market is freezing cold.
Informed, wise investors understand also about economic and property cycles: what they are, how they work, how they inter-relate and how they can tell you when you should be buying a property, when you should be holding a property, and when you should be selling one.
The economic cycle shows you what stage an economy is in. Maybe it's in recovery, boom, downturn or bust. The property cycle tells you what things you should be expecting to occur and when they will occur given the stage the economy is operating at. For example, at the height of a boom stage, share prices are usually at their peak. This means that property prices are about to peak. Of course knowing these things helps you make appropriate decisions. For instance, if you know the economy is going into a downturn phrase, you will expect property prices to be heading downwards. This will prompt you to get your funding in place so you can buy a property at a lower price than what you would otherwise purchase it at (e.g. if the economy was operating in a recovery or boom phrase).
Tune in for my next blog for W3 and W4 - What and Where Should I Buy?
The Professional Trustee Team
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015
Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.
We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.
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