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Investor tip: 'Break down the numbers'

14 AUG 2017 By Bianca Dabu 9 min read Hotspots

Sydney-based engineer Scott O’Neill has successfully worked his way up to building a 28-strong property portfolio worth $11.5 million since he started his property investment journey in 2010 and, according to him, one of his unusual but highly effective secrets to success is his “obsession with numbers.”

Calculator pen numbers

Smart Property Investment’s Phil Tarrant said that many property experts and professionals often say engineers are the hardest to deal with because they are “tough characters” who can be “too analytically oriented”.

“A part of their brain that works really well is [the part which always does the] analysing of situations or products... Engineers are engineers, right?” Phil said.

While this mindset could definitely lead to overthinking, which could be limiting as a property investor, Scott said that it has also made him more aware of risks and the best ways he can avoid them altogether.

“[I am] definitely risk-averse but I think it's helped… Whenever I buy a property, I think, ‘What if the GSE number two hits tomorrow? And interest rates go up to 9, 10 per cent? Banks are trying to get their cash back,’ then I think, ‘What types of properties will do well in that environment?’” Scott explained.

According to him, he is able to sleep well at night even if 28 properties may seem like too much to handle because he has prepared well for possible worst case scenarios from the moment he bought his assets.

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“[My properties are] not reliant on doing well. You see these guys buying properties in Sydney now, hedging their bets it's going to grow 10 per cent next year, but what if interest rates go up? They're gone, they don't get their growth. They're the guys that will lose out,” Scott said.

Scott and Phil agree that being successful in property investment takes a lot of effort and hard work, but investors who make sure to minimise the risks by purchasing good, safe, and solid assets are generally going in the right direction. Both investors believe that building a good property portfolio does not entail buying millions of dollars’ worth of mansions or blocks—one should simply look for properties that people will want to rent in.

“Just only look at the numbers. I see so many people buy because their uncle said ‘Buy this area because I feel like it's going to grow,’ and that's it. They make decisions purely on growth,” Scott advices budding property investors. 

“[They should also be looking at] what's the cash flow in and out, and then kind of predict things around population growth [and other factors]... Just break the numbers down in every way you can—that's how you reduce your risk,” he concluded.

Tune in to Scott O’Neill’s episode on The Smart Property Investment Show to know more about the diversity of his assets, how he’s “buying his time back” through property investment, and how he’s effectively managing his assets to secure $300,000 in income each year.

 

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