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Seven habits of highly effective property investors

by , 25 March 2014
Seven habits of highly effective property investors
Most of you have read or at least heard of Stephen Covey's Seven Habits of Highly Effective People. The book is famed for drawing out the common traits believed responsible for different people's success.

We'll, during a recent South African Investor meeting, I got to hear the property insights and tips from a host of property moguls and experts.

And today, I've combined these views with my own to bring you the ‘Seven Habits of Highly Effective Property Investors'. And if you make these habits a part of your property investment life, you'll quickly find yourself on the path to property greatness.


Habit One: Know where you are heading before you start

You need a goal. There’s no point aimlessly buying different properties. Doing this could end up costing you a fortune in poorly thought out property investments.

Decide what you want to achieve over the long-term and work back to the smaller goals you need to achieve to reach your big end goal.
Whatever your goal is,  the point is you need a goal. When investing in property your goal will determine in which property types you invest in, which investment vehicles you use and how much capital you need.


Habit Two: Understand the numbers

At the recent South African Investor meeting I mentioned earlier, Igor Marinkovic, a property investor that’s gone from nothing to more than 50 rental properties in ten years, told investors to “Forget Location Location Location and focus on Numbers Numbers Numbers!”
I completely agree.

Every property you look at and every deal you make should make sense when you look at the numbers. It’s no use buying a property that returns 8% a year when you can get the same interest rate from a bank on a fixed deposit.

If you run the numbers and they don’t make sense you need to leave the deal.

Those whose investments and properties do well know which numbers, costs, fees and statistics to ask for, and they know what a good investment looks like for their portfolio.


Habit Three: Surround yourself with the right people

Unless you just want to swop your day job for a job as property investor you should get the right people to help you.

Get a good accountant. You don’t want the hassle of doing your accounts yourself and you need an accountant to sign of financials anyway if you’re using a company or trust. More importantly,  a good accountant will help you set things up to minimize taxes.

Work with a proper estate agent you can trust. You need to build a relationship with your estate agent. Doing this will keep you top of mind and will result in your agent  passing great deals along to you, before he does to other customers. He’ll do so because you’re a regular investor and more likely to make him commissions.

Another person you want to have close, especially if you have time constraints, is a decent property manager. One that screens tenants, does credit checks and makes sure your rental income actually comes in at the end of the month.
 

Habit Four: Successful property investors network

Property investing doesn’t have a formal qualification you can study at any university. It doesn’t have hard rules to follow.
But if one thing is sure, it’s that your success as a property investor relies on your ability to get good deals and advice from people in the know.

And since your local university doesn't teach courses on important topics like how to evict a non-paying tenant, the only answer is for you to find a mentor who can teach you the ropes.

But it goes further than this, quite often good deals come along through other property investors you know, friends in the industry or even another managing agent you’re acquainted with that’s come across a great opportunity to buy a repossessed property at a complex they manage.
 

Habit Five: Use just enough leverage

Leverage is like a double edged sword. The more money you can get from the bank the higher your return on investment is because you are putting in less money but getting more growth. On the other hand, more money from the bank also means a swing in interest rates could hurt you badly.

Every single money-making property investor I’ve met has made money in property thanks to borrowing from the bank, leveraging their returns. Even the richest people will eventually run out of cash if they keep buying property. Leverage allows you to use a small portion of your own money to buy a property.

But, the really successful ones know when enough is enough. Too much leverage in a downturn will kill you – so make sure your property can handle an increase of two to three percent in interest rates without going under.
 

Habit Six: Find good property partners

When you’re gearing is high and you’ve run out of your own money you want to get partners for your property business.

The fact is, it’s tough to make your millions in property if you aren’t willing to partner with others. Your partner might be a family member, a friend, a colleague, a company or someone you haven’t met yet.

Partnering with someone you trust brings in fresh capital and can help to speed up the growth of your property empire in a much shorter time.

Many investors are unwilling to partner because they don’t want to share returns. But trust me, there are plenty of good deals going around – you don’t need to worry about sharing profit, you’ll make a lot of it if you do things right!
 

Habit Seven: Treat others better than they expect to be treated

What goes around comes around. If you think that your reputation as a buyer or landlord doesn't precede you, think again. When you go the extra mile to solve people's problems, both profit and success will follow.

If a tenant phones you up to fix a burst geyser in your property don’t take days to get the repairs done. Pick up a phone and get someone to fix it ASAP.

Treating a tenant well means they’ll be happy, more likely to pay on time and also more likely to stay for longer.

Not every good property investor possesses ALL these habits. But you are sure to establish a great base for growth in your investing career by making these seven habits part of your practises today. None of these things are hard to do – but if done well they could bring in returns for years to come!

For more of my top property investing tips - including how to start your own property empire with just R10,000 - click here.

Here’s to unleashing real value

Francois Joubert
 




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