Seven habits of highly effective property investors
I’ve always been a really avid reader of positive mental attitude books and one of my favorites is the Stephen Covey classic, seven habits of highly effective people and there are seven really cool habits that you can apply into your life if you really want to be the cream of your field, your life and your industry. So I thought it will be really fun to apply them to what property investors have to do because there are some similarities and some synergies across being a successful property investor.
The first one is to be proactive. The amount of time that I’ve seen people sitting on the sideline who are interested in becoming a property investor but they don’t actually take that first step and get involved. And so, really for me, being proactive is taking action. Of course, you need to not do it flippantly and you need to get some really good advice but you aren’t going to be a property investor until you actually do it. Until you actually talk to some people and get them to help you make good decisions around buying investment properties. So be proactive is really simple, take some actions.
The number 2 habit is begin with the end in mind. So for most people going through life, if they can keep their eye on the end prize, all they need to do is reverse engineer what they need to do today, simple steps done daily and they would get to that end prize. That’s the same with property investing. I find that of the people who are proactive and who actually do take action to buy property, a very large percentage of them don’t really know what the end goal is. They’ve got this kind of.. I want financial freedom but I always say that a goal without a date is just a dream. So we really need to think, how much do I want to have in retirement, when do I want to retire and then reverse engineer what that actually looks like. So I know, based on my income and my expenditure and based on the amount of properties that I need to buy and when, I can take the mystery out of it, if I actually know what’s the end game is and work backwards. So beginning with the end in mind is really important as a property investor.
The next habit is to put first things first. For me, that’s putting the big rocks in the jar because it’s not actually a competition between investors. So it’s not actually a game of going well, my portfolio is better than yours because that’s just ego and it’s actually irrelevant. Because if I begin with the end in mind, I know what I actually want and then I reverse engineer what that actually looks like and I methodically goes through that plan, it doesn’t matter what the guy next door is doing. So I don’t have to keep with the Joneses. For me, putting first things first is all about, “OK, I’ve begin with the end in mind, I know exactly what it is, what do I need to do that is important so I can actually achieve that goal.”
So it’s really crucial to know that, that competitive stuff isn’t really necessary.
The number 4 habit is think win-win. For me, there is a couple of parts to that. One is walk through the property that you are to buy through the eyes on the tenant. How are they going to live in this house because there is going to be a win for them. Will they be able to arrange their furniture? Are the room sizes big enough? Are the neighbors suitable? Are we in a nice street? Because the tenant is ultimately a really important part of the process. Equally, walk through with the eyes of an owner occupier because if we are buying an investment property, we want it to have an owner occupier appeal so we need to go, “Ok, is this just investment stocks that any investor will buy but the owner occupiers wouldn’t be interested in? Or does it have that nice sort of emotional appeal to it that would keep them interested.” That is really important. And then of course, thinking win-win is when I’m actually negotiating for the property, how can I actually make this work for the vendor as much as it works for me? Can I find out what they need to win on so that I can win on the things that are important to me as well. So thinking win-win is a really important part of the entire picture including the negotiation.
The number 5 habit is, seek first to understand then to be understood. Basically that means, don’t have pre-determined ideas about what works in the market. Instead, go and find out what ACTUALLY going to work in the market first. What do they want and what does the tenants want? Then work backwards to find that property that they really want. There’s no point going into a market with your own theory and buy it only to be proven wrong when you can do a bit of property investment research in advance and understand first, what’s going on within that sub-section of that market so you can buy the property accordingly. So seek first to understand and then to be understood is the fifth habit.
The sixth one is to synergise and that’s largely around people. Bringing together a team of people and my idea here is one plus one equals eleven. The synergy that comes from the group’s energy is often better than the energy that you have yourself. So effectively, property investing is a team sport. It’s not something that you can do in isolation on your own. Think about golfers, think about tennis players. They also have coaches and managers and people that surround them even though its an individual sport. So property investing is no different. It is definitely a team sport and you need to synergise with other people to get the best results.
And the last one, habit number seven is sharpen the saw. For me that’s a big one. You’ve got to continually be looking for wisdom and not just information when it comes to investing in property. So, knowledge is knowing is a one way street but wisdom is knowing you should look anyway. For me, it’s not just about knowing that property investing is a good thing, it’s about what makes an investment grade suburbs, what makes an investment grade asset and what makes for a great investment for my portfolio if I begin with the end in mind. So it’s really important that you continually look to sharpen the saw, get more information so that ultimately you get more wisdom when it comes to building your portfolio.
Stephen Covey was on to something when he wrote that book about how you can live a better life and I think we can apply the principles as a property investor on how you can build a better property portfolio also.