An investment property can be the route to financial security – but without sound advice it can become a burden, writes Michael Beresford of OpenCorp

 

Here’s the bad news: there is seldom a quick fix to owning an investment property. We’ve all got a ‘friend of a friend’ who bought on a whim and doubled their money in five years. Just like we’ve all got a ‘friend of a friend’ who won the trifecta at their first Melbourne Cup.

The reality is there’s no substitute for solid research, and at OpenCorp we have a formula for successfully investing in property.

We’ve quantified it at around 200 hours of rigorous analytical process, to pinpoint exactly where you should be investing at any point in time.

Sounds a lot, doesn’t it? I bet you’re already working it out: that’s about five working weeks; like flying to London 10 times; or watching 80 footy matches.

But let me put it another way. How much do you earn in 200 hours? Weigh that against the potential losses of owning a property bought in haste.

The trouble is, where do you find those 200 hours? It’s definitely not a simple exercise. Most people I speak to are well and truly cooked come six or seven o’clock at night, after a full day at work and they’re hanging out with their family.

But here’s the good news. At OpenCorp, we’ve done the research; we’ve done the hard yards; and we can save you 200 hours by adding value over and above all the research and the selections.

One of the first steps is to ascertain your borrowing capacity. Depending on your situation, it can be anywhere from 15 minutes, if you’re organised in terms of finding all the supporting documents, through to a couple of hours or more if you’ve got a more complex situation. That gives you some goal posts for what you can afford as an investor.

The next part is strategic. What kind of strategy do you need to achieve your financial goals? It pays to be hard-headed at this point, as emotion and finance aren’t always a good mix.

Many people make impulsive decisions on properties based on emotional drivers. For example, they’re away on summer holidays, life’s fantastic, work’s a million miles away. They fall in love with wherever they are.

They’ve walked down the main street. They buy a property from the real estate agent. But what’s the demand outside of summer? What’s the cashflow to hold? What part does it play within a portfolio? What are the risks? How can I mitigate them?

We’re conditioned to thinking about property in emotional terms – you’ve only got to attend the first five minutes of a weekend auction to know that’s exactly what real estate agents play on.

So to achieve logical, robust investment goals you’ll need a strategy – not a wishy-washy plan based on sunny afternoons and cute cafes.

Some of the research is common sense: it’s easy to work out what’s near schools, shops, public transport, recreation and jobs. Then there’s the next level of analysis: government trends, government spending and infrastructure planning.

Many people won’t spend that amount of time because they make the same obvious decision as everyone else. Find something close to where they live, find something they are emotional about, and attend an auction on the weekend because they like the look of the property.

And the sobering thought is that so many people simply want to improve their financial situation – they just don’t know exactly where to start.

That’s where we come in. Book a strategy session with one of our investment consultants – and we’ll make 200 your lucky number!