A
successful property portfolio is one that is not reliant on you, as the
investor, to dictate its performance, a property guru has said.
The
ultimate goal for a property investor is to have a property that is neutrally
or positively geared, and in demand from tenants, so that it is able to ward
off negative scenarios seen throughout 2020, Pure Property Investment’s
Paul Glossop said on a recent episode of The Smart Property Investment Show.
"What
stops a market from growing? Typically, it’s going to be things like more
expensive money, additional supply. And if those two things alone happen to a
property and you don’t have a good answer to say what happens when these things
happen...
"Firstly,
you’ll have a lot of fixed costs such as high strata, high running costs. If
your interest rates go up because the market has actually stalled, that’s
what’s causing it, as well as additional supply, because that is what typically
happens on the backend of a boom, then that’s really when people are left
hugely with those issues,” Mr Glossop explained.
For
Mr. Glossop, the definition of a successful property investor is one with a
portfolio that effectively, over time, is not reliant on the investor to
dictate its performance.
And
when it comes to building that resilience to stand the test of time – i.e. a
moat around one’s property portfolio, Mr. Glossop shared an interesting
analogy.
"It’s
essentially like raising children,” said Mr. Glossop.
"They
require a lot more attention, a lot more need, early in the piece. Firstly,
they need more money, you need to save more. They take a lot of time, they’re
harder work until you actually raise them to a point where your intention is
that they become self-sufficient.
"Good
property portfolios are effectively geared that way, where you know that you
put effort and time into it initially, and it probably won’t take 18, 25, 30
years to get to maturity. It would probably be more like, in a good fast
case, two to 3three years, and in some cases maybe seven to eight
years.
"But
you’re trying to build it up to eventually say, ‘Take me away and you got to do
what you go to do, which was my intention from day one’,” said Mr. Glossop.
Speaking
about building a moat around a property portfolio, Mr. Glossop noted the
property investors when putting pen to paper needs to consider two factors –
where to get the fastest growth in the shortest period of time, and their
defence when that growth inevitably stops.
article source:
https://www.smartpropertyinvestment.com.au/
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Jason Gwerder
Thursday, 4 February 2021
