Deciding to invest in real estate is an exciting, challenging, learning-curve. But building a booming portfolio and growing your personal wealth takes a certain kind of investor.
The question is, what kind of investor are you going to be? A one-person show, or a mega CEO?
Most people when they think of purchasing investment property, initially think they’ll be a landlord. This is often the first mistake that people make. But here’s the thing, you don’t become successful in property as a landlord, you become successful in property as an investor.
There are significant differences between the two that will have a direct impact on your ability to create wealth. Let’s explore this further:
Someone who invests in property and also chooses to be the landlord has what we call a “DIY mentality” when it comes to every aspect of their properties.
From the accounts to the management, to fixing the dripping tap. They want to do it all and be involved in every detail of their investments.
Generally, this mindset comes about in an effort to save money.
Property managers charge fees. Repairs need electricians and plumbers. Land needs gardeners and arborists. More money going out.
The landlord investor assumes that if they do all of this themselves, they will save money and grow their personal wealth faster.
In reality, that’s often not the case.
If you’re the smartest person on your team, your team is in trouble.
To start with, what is your time worth? If you’re still working a day job, but being interrupted every five minutes by tenants, or having to go to the bank to deposit rent, or chasing potential renters for paperwork, where is your stress-level going to be?
If you’re spending weekends fixing toilets and trimming hedges, when you could be at the beach with your family, or seeing friends, where is the pay-off for having these properties? Where is the quality time you’ve earned?
Yes, there is a cost for the services you’re going to need others to provide, but that cost will be a small fraction of what you make in capital growth and rent return if you’re investing wisely.
If you want to be a landlord investor why not look at just one aspect of your properties that you want to oversee, something you’re already an expert in or simply love to do.
If gardening brings you joy, this might be an aspect you look after. But consider delegating some of the other chores to allow you the time to reap the rewards you’re earning.
The investor mentality is similar to that of a CEO of a big company.
You know that to achieve your big picture goals – i.e. build a booming property portfolio that provides with you the passive income you need to live the life you want – you need an expert team.
An accountant who can keep track of the money. A property manager who cares about your $500,000 investment the same way you do, and will look after it in the way you expect.
An investor looks at a property portfolio as a business and knows that if done properly you don’t need to get your hands dirty to create wealth. They drive a car, but they don’t feel the need to be a mechanic.
Property will grow in value while you’re sleeping, it does it by itself. But it needs the right support system, and a smart investor knows they aren’t – and don’t have to be – the expert in everything. They just need to hire them.
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CEO – Positive Real Estate New Zealand