EXCUSES THAT STOP PEOPLE BUYING AN ......2017/03/10 · they can actually do with their money – and how great their potential for ﬁnancial success actually is. If you have a $100k

www.residentialinvestment.com.au

(and why they’re wrong)

10EXCUSES THAT STOP PEOPLE BUYING AN

INVESTMENTPROPERTY

AbouttheAuthor

Jason Partington is married and the father of three beautiful children living in Avalon up on the northern beaches of Sydney. Jason has a very personalised approach, always going above and beyond for his clients, and brings a wealth of expertise and experience to his role as Director of Client Relationships at Residential Projects Australia, which has been helping Australian families invest in affordable & innovative property solutions for 18 years.

www.residentialinvestment.com.au01

IntroductionMost Australians are well educated enough to realise they must do something other than put their 9.5% contribution into superannuation in order to ensure they have enough to retire on.

Paying off the mortgage and adding to super is simply not enough to maintain the kind of savings we need to have a comfortable retirement, and the likelihood of the Australian Government being able to support our aging population is under question.

Australians are renowned for our ‘she’ll be right mate’ attitude – an attitude that can lend itself to living day-to-day without worrying too much about the future or what financial burdens it will bring.


Property investment is a historically safe investment. This perception is based on solid returns over the last 80+ years of property performance, yet many Australians - despite knowing the advantages of having a property portfolio - will never make the first step towards ensuring they have enough in retirement to enjoy a long, happy and stress-free old age.

Here are some reasons why…

MisalignedBLUEPRINT


01

For me, the message from my parents was: ’get a good job, buy a house, pay it off … done!’

At the time they told me this, it was very relevant for people in their generation. Most people held down the same job for a lifetime, people were dying 20 years younger, and the retirement savings required were significantly less.

What do we mean by a misaligned blueprint? It is the beliefs we absorb through ideas passed on from parents, influencers and peers as we were growing up.


Misaligned Blueprint

Nowadays we are living much longer, which means we need a much bigger safety net to last all the way through to retirement and beyond. If you follow my parents’ advice, you may well be sitting in a home that you own freehold by the time you reach retirement, but you will need to be supported by the Government pension and what relatively little super you have accumulated from that time on. I’m pretty sure it’s not most people’s goal to try and live for the remainder of their life after working on a measly $350 per week … hardly enough to pay for groceries, let alone live out a rewarding retirement enjoying travel, grandchildren and the sweeter life.

We need to understand that the messages and advice given some 20 – 30 years ago may require some updating to meet the needs of a rapidly changing economy.

It is important to get the most up to date information, face the reality of the situation and embrace new thinking and actions.

Ask yourself this question: Is what I am doing today going to ensure that I have enough funds and savings in retirement?’

In all likelihood, if you look at the current state of the economy and our debt as a country, it is a likely outcome that the Government will be unable to afford superannuation in the future.

Our Government has already made moves to increase the retirement age to 70, a decision based on the worrying statistics that show our country cannot afford the amount of pension required to support this population of aging baby boomers.

Most Australians do not realise that they have choices available to them right now that will dramatically change their outcomes for the future.

It is important to understand those choices and realise that for many Australians, especially those who are paying off a mortgage and have some equity in their homes, that they actually have a lump-sum at their disposal to leverage for investments.

We recommend most families and couples in this situation to engage a finance specialist in order to understand those choices and work to put themselves in a proactive situation rather than a reactive one.

Many people refuse to look at the future and just focus on survival day to day. Putting your head in the sand because the prospect of considering the future is intimidating will not change the outcome – in fact it will make the outcome all the more terrifying.

It’s important to face the facts and tackle the situation.

Head in theSAND MENTALITY


02

A lot of people are looking for the GOLD. They are searching for a ‘get rich quick’ scheme and, simply put, they take unbelievable risks with their hard-earned money with the hope of unearthing lots of money in a short amount of time.

Success in property investment for me has always been about research, education, consistency and discipline. Many people make emotional decisions about property, rather than basing their decisions upon cold hard facts – which are far less likely to let you down than ‘a good feeling’.

There is a myriad of information available, much of it from property specialists who can steer you in the right direction. It is important to engage information and advice from people you can trust, and who have a history of success in this field.

Most people I know have a negative story to tell about failed investments, and money that has been lost as a result.

If you take people’s horror stories to heart, you will never take action.

What is important is getting your information from a reputable and qualified advisor who can empower you with the right information.

9 times out of 10, when I hear negative stories about financial risk and failure, there are many factors involved which have impacted the outcome – most of which are avoidable with the right advice.

NegativeSTORIES


03


04

Sometimes people start to take action, but get really confused with all the different opinions about where to invest. This confusion can lead to stress, frustration and ultimately to not taking the next steps.

On any given day I can do a simple online keyword search for successful property investment tips, and come up with about 100 different opinions on where to buy, what to buy, how to buy, what structure to set up, and so on – with much of the advice being completely conflicting. That’s why it’s important to cut through the noise and access focused advice from a professional.

Don’t get me wrong – the internet can be a vital tool for anyone looking to start their own research and get a general understanding of the ‘lay of the land’, but learning to hone that knowledge and seek out the next layer of advice and recommendation is the best way to capitalise on the huge well of information available. This will enable you to ask great questions, and to obtain a better feel for the person or company that you may engage to assist you to move forward.

It is too confusing /I don’t know WHERE TO BUY


It is too confusing / I don’t know where to buy

Some good questions to ask are

Is the person giving the opinion qualified to do so?

What is their experience and level of success?

Has this person been in the Industry for a long time?

Do they have positive testimonials and referrals about previous success?

Does the person giving the commentary have a vested interest in recommending the property they are showing you?

Are they involved in the actual development or own part of the development?

Starting with the basics will provide you with a core foundation of education which you can build upon, and engage the right people.

The Fear ofLOSING MONEY


05

There is a real fear factor for many first time investors (FTI), and that fear factor is normally in regards to borrowing more money from the bank.

The FTI is typically concerned about getting further into debt and restricting their freedom.

First and foremost, it is very natural to feel this way.

Once again it comes down to education, risk profile and understanding the entire situation. A lot of this can be solved by taking action on the first step, which is to better understand the numbers required for retirement and embracing what choices are in front of you.

If you were to just continue to make your super contributions and try to put whatever remaining money you found yourself with each week into a savings account, most Australians would find themselves severely short of their required retirement savings.


The fear of losing money

We are very lucky in Australia that we can use leverage to be able to borrow money and make more of an impact on our retirement strategy.

By borrowing to buy an investment property, the aim is to leverage the bank’s money and get a higher return on a larger sum.

Take this very basic example from John Smith on a 100k salary who has $100k equity in his existing home.

John borrows $400k to buy an investment property valued at $360k ($40k additional for approximate costs)

If that property grew by 6% per year, it would appreciate in value by $21,600 every year, with the taxman and tenant doing most of the hard work of paying it off for you!

Most people struggle to save $5,000 per year, but with an investment property it is possible to secure more than four times that amount, with minimal input from you. It’s simply making your money work harder for you.

Confusion about THEIR POSITION


06

A lot of people we talk to every day do not realise that they are actually in a position to invest at all. As discussed, they have been told that the sum of their ambition should be to buy a home and pay it off – case closed.

Once we sit down and examine their financial position, most people are shocked to discover just how much they can actually do with their money – and how great their potential for financial success actually is.

If you have a $100k equity in your home (or have $50k in savings) (+ min 3 months in your bank account), and have a combined (couple) salary of $80k+, then you may be in a position to invest in property. There are many different factors involved in whether a bank will lend the money (such as serviceability as well as debt history, etc) or what value of property you can buy, but it’s definitely worth finding out.

Even if you don’t have enough right now, you can start a plan to get the initial savings on track so that you can invest at some stage in the future.


07

When you understand the power of leverage and you educate yourself on the positive benefits of property investment, you will soon discover that not all debt is created equal. There is a huge difference between what we call ‘good debt’ and ‘bad debt’.

In essence, Bad debt is where you might be paying high interest rates without being in a position to receive any cash flow from the debt itself.

Good debt, on the other hand, is where you have leverage a higher sum of money than you could save from a bank or institution, and where there are significant benefits to holding that debt. Some benefits may include tax advantages, or the debt being paid by someone else, such as the renter.

Property investment has a multitude of positives, including paying off your actual home faster (sometimes as much as 7- 10 years faster), receiving tax benefits from the Government for depreciation and having the capital growth of the investment working in your favou

Worried about beingin debt to the banks or FINANCIALINSTITUTIONS

Are you starting to see how, when looking at all the different alternatives on investing, property has a very good historical record of producing wealth? I hope so.


Worried about being in debt to the banks or financial institutions

I like to ask people to explain to me what their worst-case scenario is. For many people the worst-case scenario is having to sell the investment because it can no longer be afforded. If that happens, in most cases the bank will be completely paid off by the sale of the home, and hopefully (if you have invested in the right areas) you will have the remaining amount available to you from the years that it has appreciated in value.

Not to negate the positives of shares, but if you were to invest in a company that failed, or we experienced another economic downturn such as the Global Financial Crisis, you have basically lost your money with little opportunity to recover it.

Fear of success is a bigger problem than you would expect.

All families have a history, and that history can sometimes lead to inaction or bad decision-making.

Many people feel that their future is already written. Their parents were poor, their grandparents were poor, and as a result it become a family narrative that we must ‘struggle to survive’ - and that is just the way it is.

Changing these kinds of outcomes means doing something different from what has been done in the past. And that takes a lot of courage.

That being said, as long as you have a desire to rewrite your own future and achieve a different outcome, it is not only achievable, but also relatively easy.

The statements I hate most in the world are ‘I wish’ and ‘I want’

And these ones as well: ‘I should have’, ‘I could have’ or ‘I would have’.

We hear these all the time from new members. They say ‘if only I acted 10 years ago, when I wanted to, then that property would have been worth $X amount now,’ or ‘I wish I acted back then,” or “I really want to be successful but don’t know how’.

All of these statements are a result of inaction, and at some level, fear of failure or fear of success

Many people at some level believe they don’t deserve to be wealthy. It doesn’t need to be that way, it is a mindset that can be changed by taking the first steps to finding out what choices you have available - and then taking action!

Fear of failure /FEAR OF SUCCESS


08

Fear of theUNKNOWN


09

When we speak to our members, many of them have put off the decision to invest because they are worried about what the future holds. Will interest rates rise? Will negative gearing still be available? What if I can't find a tenant?

It is completely natural to worry about what the future might hold, however there is powerful quote that I really love, "If you always do what you have always done, you will always get, what you have always had."

Life will improve when you improve yourself.

These questions are never ending.

To overcome these fears, concerns and worries, you need to educate yourself and become empowered.

There are many reasons why people choose property as their major strategy in building wealth; one for example is because there are significantly lower risks involved than other options. It is really important to start broadening your knowledge base by doing some preliminary research and then surround yourself with people in the industry who have a track record of success.

* Start the education process. Get a baseline understanding of property investment, the market, and the benefits to you etc

PROCRASTINATION


10

The ever-popular statement ”I’ll wait until next year, when the market is better” is something I hear all too often. Another popular one is “I’ll do it when things settle down at home” or “as soon as I get a job that pays more!”

I could probably give you a hundred excuses I’ve heard from people explaining why they don’t take action today, and 90% of them are just that … excuses.

Successful and wealthy people do one thing really well, and that’s take action. They take the first steps.

In order to be wealthy or financially independent, you must take steps to bring it towards you. The good news is, those first steps are really quite simple …

After you take these 2 steps, you can then choose to either engage a reputable property investment company to assist you in your choices, or go it alone.

Either way, I urge you to take the first steps.

* Engage a financial specialist to better understand your situation and understand what your choices are…

Your bestNEXT STEP

See if IQUALIFY


If you have been thinking about the future and would like some clarity on how you may be able to best position yourself for a positive retirement then see if you qualify for a free personal investment discovery session with an RPA expert. We’ll assess where you’re at and more importantly, where you could be.

Who is Residential Projects Australia?

For 18 years, RPA has been assisting Australian families to secure a better future via property investment and debt reduction strategies at an affordable entry level.

Our expert property investment specialists are experienced in all aspects of property investment. Our clients come to understand that the ability to become truly financially secure is available to them through RPA.

We are an independent, Australia wide property research and investment firm with a proven track record. We are not builders or developers. Unlike large companies under pressure to offer underperforming properties, we research and select the right property for our clients. We focus on boutique developments and new estates with a high percentage of owner occupiers. Before a property is recommended it must pass the stringent RPA investment criteria.RPA guides and supports its clients through every stage of the property investment journey from the very first step.

www.residentialinvestment.com.au

DISCLAIMERThe information featured in this publication is for general information purposes only. It is not intended as financial or investment advice and should not be construed or relied on as such. We recommend you seek advice from a qualified and registered financial or investment advisor. No material contained within this publication should be construed or relied upon as providing recommendations in relation to any financial product.

Residential Projects Australia and Jason Partington aims to ensure all information is accurate and correct. This E-book publication has been created with intention to provide quality resources and general information to our audience.

Residential Projects Australia Pty Ltd, it’s partners, Jason Partington & its employees cannot be held responsible for any errors.

Copyright 2016- Residential projects Australia Pty Ltd

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EXCUSES THAT STOP PEOPLE BUYING AN ......2017/03/10 · they can actually do with their money – and how great their potential for ﬁnancial success actually is. If you have a $100k