When people ask why I got into property, the answer is simple – I wanted to retire early and spend more time doing the things I love. By Nathan Birch, co-founder Binvested.com.au
When at 24 I was able to retire on a passive income from property, it turned out one of the things I loved most, was in fact property. I continued buying properties, renovating and posting behind-the-scenes videos to Youtube, and before long had people asking for my help to achieve their property ownership goals.
Binvested group of companies was a natural progression from what I and my co-founder Daniel Young, had already been doing. We built it from the two of us into a 100+ person business by applying the same principles to building a business as we have to building a property portfolio. These principles include: spending time in planning the next move, setting clear goals, building strong relationships, outsourcing weaknesses and making sure the numbers always add up.
A failure to plan is a plan to fail. View every acquisition, sale, or renovation as its own project. Why are you taking the action? What is the desired outcome, and how does it fit into your long-term goal? Assess the possible risks and document them. Outline each concrete action required to get to completion, and of course, budget every action and have an amount set aside for contingency.
When building a business or a property portfolio, you should always have clear goals in mind, working backwards to map out each step to achieve this. Whether you’re building a business that you one day plan to exit and sell, or buying investment properties to fund an early retirement, your goals need to be specific, measurable, achievable, realistic and timely. We have people coming to us all the time who have purchased properties without
first getting clarity on how these fit with their long-term goals. This only makes the journey more difficult. Big picture goals should take into account where you’ll be in the next 10, 20, 30, 40 years.
Likewise, starting a business require a clear ‘why’ and goals to work towards. These in turn need to be broken down into specific objectives that can be ticked off along the way. An example might be, within six months, I will save $x amount for a new deposit. This doesn’t mean you need to have everything figured out or that everything needs to go according to plan – it won’t – but with a roadmap you can change directions and still reach your destination.
Second, remember that relationships are key. You can achieve your goals a lot faster with qualified help from those around you. Daniel and I were on a similar trajectory and together have built a successful business by hiring our weaknesses and building strong relationships with staff, customers and the industry. You never know where your next opportunity will come from. Our no B/S, genuine approach has earnt the respect and appreciation of our customers time and again. Whether it’s a business partner, mentor, friends and family, contractors, experts – you can’t do it alone!
This brings me to point three – outsource your weaknesses but do so smartly. Just like you might not be an expert at building a website for your new business, you probably aren’t an expert at property management and finance. How much is your time worth?
Don’t waste it trying to do a job someone else has spent years training to do. They’ll do it faster and save you money in the long run. That said, you can be smart about outsourcing on a budget – for example, when doing a renovation, I’d often hire a handyman over a professional tiler to save on costs for a job that will be done just as well.
Last but not least, make sure the numbers add up. Both your business and property portfolio should be making you money and align with your personal financial goals. No one goes into business to lose money, so why would you buy a property that’s negatively geared and losing you money from the outset? When looking for property we have three core criteria: below market value, high growth potential and strong cash flow. Don’t let emotions dictate your purchase decisions – stick to the numbers and make sure they add up.
Once you have a property portfolio, be diligent in documenting every dollar you spend. If you’re not claiming every single expense incurred by your portfolio, you’re still thinking of it as a personal income, and not a business. A financial advisor can help you to identify your position and goals before you’ve signed any contracts. Start with the end in mind.