Why Property Investment Is A Business
HI! This is David Lee. My presentation for you today is, “Why Property Investment Is A Business”. I’ve got much experience in property and I’ve seen a lot of things happen over the last few years. So, I’m going to break this presentation into three parts that I believe are very important to you.
1. False Illusion of Wealth
2. Never Ending Education, and,
3. Problems At Any Moment.
So let’s get started with this.
Part 1: False Illusion of Health
What do I mean exactly by that? Well, when we were kids perhaps we will played the game Monopoly or more recently the cash flow games by Robert Kiyosaki, and we got all excited about that and we wanted to be able to do that in real life. And property is something that can sound exciting, and you can see it, and you can touch it, and you can talk about it to friends and family about what you’re doing. So it’s got a bit of buzz to it.
But my experience of seeing people going into property investment is that of false illusions of wealth. They see you all the good. They don’t see the other side, the not so good. Don’t let me put you off for a second. What I’m saying is, like anything else, this is a business! You have to treat it like a business. You have to run it like a business, and you really have to prepare for it like a business.
And yet so many times, I can’t count the number of times, I see people from a background in their professional and private life that has nothing to do with running their own business. They think they can just pick up a piece of paper and the piece of paper’s going to do magic for them, like create a transaction, create what they call a “deal” out of thin air. Or they’re going to go and talk to people at property events.
Now I’m very, very sincere when I say this, you need to be running your property business really like a business. And so often I don’t see it. You must be taking it seriously. You’re going to need some foundation skills, because you can get yourself into trouble very quickly because you’re playing Monopoly, you’re playing Cashflow with high numbers that is real life. And without the experience, the background, you really don’t know what you getting yourself into.
Part 2: Never Ending Education
So the next step you need to know is that property and property investment is an ongoing process of education, never-ending education. Why is that? Because the market moves up, it moves down. You have to change your strategies accordingly. You have to be aware, and aware in advance, of the economy. Where it’s going? Where interest rates are going? Where rents are going? What strategy you’re going to apply that’s going to be cash-flow sensitive in a market where there’s not much capital growth? Or where the market moves to appreciation how you can benefit from that appreciation?
But you must know these things, and where do you get the information from? That is the question. Many property events are teaching you strategy. That’s fine! You get to know the particular strategy you wish to apply. But what’s lacking quite often is the environment around which to apply what strategy? When to apply a cash flow strategy? When it’s a good time to play one strategy as opposed to another?
And who are the people you’re going to do business with? How you’re going to communicate? How you going to market? Yes marketing, communication, branding, testimonials. This is the same thing for any business, and yet it is overlooked! Too often it is overlooked.
This is the reason why I see so many people fail, and I don’t want many people fail when the fundamentals are easy to learn, but they are fundamentals. They are the groundwork, the layering that you need to get you up to the very pinnacle, which is the strategy you’re going to apply.
But if you like the communication skills, you lack the marketing skills and you just apply what somebody else told you, well the market changes, and your marketing needs to change. But if you’re dependent on somebody else, that is not running a business. It’s just hoping and praying that what you do is going to work. So it is never ending education.
Part 3: Problems at Any Moment
And understand, as well that in property, just like in the picture here, problems can arise at any moment. “Merry Christmas Mr Landlord…but the boiler’s broken!” So you need to have a team in place to be able to remove yourself from any problems like that. But in the early days, if you’re just starting out, you might be taking those calls yourself. So be prepared! Expect the unexpected.
So if you just thinking that is all going to be fine, or that the money is just going to come in, there’s going to be no voids or there’s going to be no breakdowns or anything that you’re responsible for, you can lose a whole year’s worth of income in one boiler breaking down.