Three ‘start-up’ tips for budding property investors

Michael said there is a reason behind every one of the properties purchased. 

"There's a lot of potential there and you can look at the price lines and go, ‘This moved from this to this ... would've made this amount of money,’ but there's a reason behind every single one of [the] purchases. 

Here are three things he's learned from Phil: 

 1. Using a buyer’s agent

After years of working with an investor who believes in the value of a good financial team, Michael plans to start his own journey by seeking advice from the best professionals.

“I want someone who has the knowledge and skills and years of experience knowing the macro and microeconomic factors that happen within a region or within a street,” he said.

2. ‘Pigeon-pairing’

The term, coined by Right Property Group’s Victor Kumar, basically means picking a high-capital property and “pairing” it with a high-yield asset.

According to Michael: “Being tight on cash flow, or as a beginning property investor, I think pigeon-pairing is really important so you can try and net out everything.”

As a property investor, you want to achieve high capital growth while minimising the cost of holding your assets through the years, as it grows in value.

“If you can find some good yielding properties that add positive cash flow to offset negative cash flow, you might have a neutral position and, hopefully, both cap in value." 

3. Saving and budgeting

Michael also recognises the importance of education in order to manage his finances well.

One of the best things he learned about budgeting is the importance of setting a clear goal right at the beginning of your journey. Because, while saving money sounds easy for some, doing it for no apparent reason could be a miserable task.

On the other hand, when you have a goal and the time comes that you achieve it, it becomes a rather gratifying experience.

“What I've done, personally is worked out my own personal budget and how much I'm spending on rent or whatever else - and, my background's in accounting, so I love an Excel spreadsheet. 

“Basically, I just worked out if I saved x amount, what does that work out into a year and a half's time? How do I go about purchasing that property? There's a bunch of elements go into that, but if you know these things, you can set that goal,” he added.

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.