Having an end goal is critical if you’re going to invest in property. This video discusses a few things to consider when looking to build a property portfolio
VIDEO TRANSCRIPT
In this video, I’m going to be talking about the idea of setting goals for your property portfolio. It sounds really simple, but in my experience, this is one thing that I see most people getting wrong. What the best investors do, is they actually set a goal for what they want their end portfolio to look like and then they work backwards. In my experience, the best way of doing this is to actually setup an income goal. So that is a before tax or an after tax income goal that you’d like to receive every week or every year at some defined point in the future. So the people I’ve seen, the best investors that I know do that, I’ve certainly got an income goal for myself and whilst I’m not there yet, I sort of continue to work towards that goal. I know the types of properties that I need to buy, and when, and that’s my sort of plan and I go along accordingly. Where people get in trouble is they don’t have any goal to work backwards from, or they might have some sort of vague idea of, you know, I want x amount of properties. They might’ve read an article and they’re like, you know what, I need 5 properties, I need 12 properties, whatever the number is, but it can be quite random. Some people go a little bit further and they actually sort of say, well, I’d like to get a certain amount of net assets. So you know total property less the debt on that property, and that’s good. Again, my preference is to go one step further and actually get a discrete income target. But even having a net asset target is much better than having nothing at all. But that’s one of the things that I see most property investors get wrong. So the best way to do it in my mind is to sit down with, if you’re investing by yourself or with your partner, or whatever, and to actually take some time in the beginning to map out what you’re looking to achieve from that. So if you have a net income target of, a lot of people say $ 100,000 a year across a couple of people, so easy maths, and that’s sort of 2,000 dollars a week. If that’s your target then you’re working out how many properties you need, what sort of debt you’re gonna be needing to take on for that and working all the way backwards. So that’s an important thing to do and that’s going to dictate, therefore, how you invest, when you invest and the types of properties you invest in. And if you go along that way, I think like you’re going to get a lot more success, rather than just waking up one day, jumping on Domain, doing a little bit of research, picking up a property and then just waiting to see.
