New Years’ Resolutions – What Investors Need To Do To Make Them Work
as published in apimagazine.com.au by Cate Bakos
Buyers Agents and Mortgage Brokers around the country will have likely experienced strong enquiry in January, as they do most years. Prospective investors reach out often over the holiday break to schedule time to chat about building their property portfolio, refining their strategy or even taking the plunge and getting onto the property ladder for the first time.
Why January? Some would argue that it’s a time when people can take stock, think without the distraction of work or take the time to plan alongside their partner, but there is often another stronger force.
It’s all about New Years’ Resolutions.
Whether they’ve sat back waiting for the ‘right time’, or they’ve been timid about making a bold decision, there are multitudes of reasons why investors feel they need something as significant as a New Year’s Resolution to kickstart their property purchasing activity.
But despite the number of strong enquiries we can receive in Jan as Buyers Agents, a large proportion of them don’t manage to get past the initial engagement. Why is this?
Some will never get past this step. This is due to a complete fear of committing to a financial commitment as significant as property. They may attend seminars, pay for courses, subscribe to publications and regularly interview BA’s and brokers, but they won’t manage to step off the diving block and into the pool because of their fear.
The next category of prospective investors are able to overcome any obstacles by having a firm strategy and following the next steps in the process, but unfortunately don’t because they don’t allocate the time and energy appropriately to the task during the January break, and they find that life just gets busy again. And so it goes, they are back on the annual work roller coaster and won’t find time to consider property investing again until they are next laying under the umbrella on a beach somewhere next January. It’s just not enough of a burning priority. It’s these prospective clients that are in a BA’s ‘past contact’ folder each January, year after year. “Hi there, it’s us again. It’s been a long time, in fact, a whole year….”
The following category is the overzealous category. These are the folks who want to build Rome in one single day. They want a portfolio, and they want it yesterday. They have a likely number of properties to acquire by an ambitious date. The problems with this approach are too numerous to list, but the major issues hinge around risk and finance. Pouncing into rapid property purchases carries enormous risk, and the impact on the ability to carefully plan, study cashflows, map out the projected outcomes, analyse the debt retirement timeframe and agree on a path forward with other stakeholders, (ie. partners) is all compromised when things are rushed. The worst case scenario for a buyer who is overzealous is that they make a terrible purchase decision, forfeit their deposit due to an inability to settle, or manage to settle but are forced to sell at a loss. The common outcome that we see in this situation is that the enormity of the task is overwhelming, the buyers realise that there are too many holes in their strategy, and they put it all into the ‘too hard’ basket.
The successful category of investors, however all have four things in common;
They take their time to work through what it is they are trying to achieve at a broad level,
They ask for recommendations or search online for positive, independent reviews for advisors whom they can talk to,
They sort out their finances, obtain great loan structuring advice and get pre-approval in place, and
They ensure that they are on the same page as their partner, (if applicable).
It’s those buyers who are realistic, committed to the long term journey, understand that risk exists in every investment decision, and take their time to follow the steps who don’t end up emailing their Buyers Agent or Mortgage Broker again in January 2021 to tell them that time has slipped through their fingers for another year.
