As a young investor trying to make it in the property market, it seems as if everything is against us: Agents don’t take us seriously, banks don’t like us because we don’t have many other properties to use as security, JV partners would rather work with someone who has a tried and tested reputation within the market place and many people just don’t have the time to teach us the fundamentals in property investing; unless of course you are willing to hand over a few thousand dollars for a weekend course that will probably make you more confused than when you walk out the door than when you walked in.
There are a ton of young investors out there, who are keen to get into investing and just need a helping hand to get some clarity, not on what the market place is doing, but what the different strategies are, which suit them best, how to get started and who can help them achieve this. I believe that having seen the last boom and now the recession, many of the younger investors are aware that property prices don’t always go up and that there are smarter ways to get into property than just speculating, but they do not know what these strategies actually are. Have we as an industry forgotten how to use our creativity to get a deal across the line, or have we just laid down and submitted to the fact that the banks now control our industry.
Most people I talk to know they can either buy for cash flow or buy for capital growth. Buying for capital growth generally means having to fund the difference between rent and expenses from your hard earned after tax dollars, and cash flow means you have to work just as hard to save deposits and buy hundreds of property returning a small amount each week before you can actually do anything useful. But there is more to investing than just those two methods.
However of the other strategies: due to the complexity it is nearly impossible for a newbie to start off in developing, councils have made it virtually uneconomical to subdivide any more, you now need a real estate license to flip property and most banks are not big fans of vendor financing. All that is left is renovations; something everyone does and many get wrong as they don’t understand the numbers involved.
So what are we to do? What if the more experienced investors who are time poor money rich were to take on keen young amateur investors as an ‘intern’ or ‘apprentice.’ They could help train them up and split the profits accordingly. Most trades already do this and if property investing is supposed to be treated as a business then why are we not doing this already. Apprentices could be swapped around different investors to give them a good introduction to many of the different strategies just as a chef goes from A la Carte Buffet Hotel restaurants when they do their apprenticeship. If we were to build a network of those looking to get into property and those who are already successfully investing, but don’t have enough time then would we all not benefit?
The industry is full of really smart people trying to do it all by themselves, is it not time we all worked together and helped build the wealth of everyone at the same time. After all there has to be a reason why the average investor only owns 1 or 2 investment properties. Instead of ‘property gurus’ charging exorbitant fees for mentoring, if they were to put their money where their mouth is and take a percentage of profit for every deal they helped package, they would be making a lot more money than a straight up fee and a lot more people would want to work with them.
I am currently setting up a networking group, if you are an investor under 35 and looking for like minded peers, or an experienced investor looking for someone more energetic with more time on their hands who can work with you.