Property investment tip: ‘Don’t be in a race to grow your portfolio’
Michael Johnson joins a large number of young professionals who are looking to start creating wealth through property, but unlike his peers, the 22-year-old accountant believes that success is walking the thin line between building a portfolio too fast and buying too slow.
A lot of young people often find themselves disheartened by the thought that it’s getting harder to save up for a deposit while property prices only continue to go up, particularly in capital cities like Sydney. However, having worked with seasoned property investors such as Smart Property Investment’s Phil Tarrant and Nest Egg’s Alex Whitlock, Michael knows better than to be a “doomsday man”.
“I understand that there's more opportunities outside New South Wales, but, I think some people don't get that there's other ways to create wealth other than just buying a home,” he says.
While some people his age choose to save in order to buy a home straight away, he prefers to spend his 20's living a lifestyle he enjoys and placing his investments where he can afford to do so.
“I'll go rent on the northern beaches or somewhere there and just enjoy my life, get in a bit of a surf, bit of fishing. Then I'll place my investments where I can actually leverage them right—it might be Brisbane, it might be Tassie, it may be Victoria.”
Goal-setting
More than crafting the right strategies to create wealth, property investment is about understanding what you’re buying, why you’re buying it, and how all of it aligns to lead you towards where you want to go and help you ultimately achieve your goals.
According to Alex, who has successfully built an 18-property portfolio with Phil, your property investment journey is only as strong as your goals are clear.
“How is a property going to fit in your overall play? Some people are going to want, and need, to have a reasonable portfolio to do the things that matter to them uniquely in their lives. Other people might need only a couple.
“If you don't know where you're going, your portfolio plans may end up becoming a burden. If you end up with too many properties too fast with too many debts and you don't really know why you're doing it, that's not necessarily a good thing. Equally, if you go too slow you might realise that you should have, maybe, bought more earlier."
Taking your time to know your goals as well as your capabilities and limitations as a property investor is the perfect first step to begin your journey towards creating wealth through real estate assets. After all, property investment is a long-term play—not a competition of who can get most over the shortest period of time.
Phil advises young budding investors: “Unless you can afford that, don't be in a race to grow up too quickly. Just enjoy your 20's. If you get into your 30's and you start going, ‘Hey, I want to start getting serious about property investment,’ you can sort it out.”
“It's never too late,” Alex concluded.
Tune in to Michael Johnson and Alex Whitlock’s episode on The Smart Property Investment Show to know more about the day-to-day operations of an 18-property portfolio, as well as the impact property managers have had in steering property investment journeys into success.
More from this writer:
-
Why it’s still worth selling – even in lockdown
-
Over 200 Perth suburbs see winter price growth
-
Auction volumes on their way back up
-
Low interest rates drive record refinancing
-
Tassie’s own $20k HomeBuilder grant finds early success
-
Capital cities see stronger auction success
-
2020 vs 2021: How lockdowns have impacted the market