If you’ve imagined that most Australian property investors are big income earners, sitting around in suits counting their stacks of cash, you’re in for a big surprise.
The Australian Taxation Office tells us that around 45% of all investment property owners earn below $50,000 per year, and 78% earn below $100,000. Yes, most landlords in Australia are humble ‘mum-and-dad’ investors that simply can’t afford to make big investment mistakes, but unfortunately most do.
These common mistakes place painful stress on an often very limited cash flow. This causes the inability for most aspiring investors to build their portfolio beyond just one investment property.
The ATO recently identified 90.2% of Australia’s 2,150,000-plus property investors held only one or two properties. The remaining 212,000 investors owned between three and six properties, with just 20,000 holding upward of six.
When you consider the lack of planning that goes into the selection process used to buy that first investment property, it’s easy to see why so many investors fail to gain the momentum required to build a successful property portfolio.
The old saying, ‘a failure to plan, is planning to fail’ certainly rings true, when it comes to the average property investment experience.
Blind faith in ‘bricks and mortar’ often leads to failure
It seems our deep-seated belief around the safety and predictability of brick-and-mortar investments is both our greatest asset and perhaps one of our greatest risks.
The references we have to the historic performance of property prices within very familiar postcodes often leads to ‘blind faith’ becoming entrenched in investors, creating a dangerous belief that every property you buy will provide the golden ticket to a comfortable retirement.
Many of us remember what our parents paid for the family home 30 years ago, then use this knowledge to give confidence to our buying decision, imagining how great it will feel 30 years down the road if we buy an investment property in a similar suburb. Whilst this belief will most likely be proven true, investors underestimate how much financial strain you could go through over those years.
This lack of understanding around how to select the right property, usually results in it feeling more like a huge weight on your shoulders, rather than a positive asset that will elevate your wealth.
This first property purchase is usually so poorly exercised that it often ‘rips on a financial handbrake’ for years, leaving the investor stuck in debt, painfully out of pocket each week, and with a huge strain placed on their relationships and lifestyle choices.
Learn how to prepare yourself for wealth
The good news is that successful property investing is not as hard as most people make it. We’ve all worked way too hard to take unnecessary risks but we can’t afford to stick our heads in the sand and not ‘step up’ and take control of our wealth.
I’m living proof that you can build life changing wealth without needing to earn a massive income if you just follow a proven, reliable investment game plan.
Given that most investors live busy lifestyles this often exposes them to the risk of making quick, poorly informed investment decisions. Please don’t let that happen to you.
To find out how you can prepare yourself for wealth make sure you download my latest book (this is outlined in chapter 2), it’s my free gift to you!
The book also outlines the 5 Steps I’m currently using to navigate the national property market. Helping me target the safest and most exciting investment opportunities created by COVID-19.
I’m confident you will appreciate the ‘step by step’ guide this book offers to fellow Investors. Enjoy the read.