You Just Can't Have Everything, OR Can You?

Post by Garry Macdonald of Property Buyers Australia

A fundamental concept of investing is the "risk/return/capital growth" equation. We like to think of it as a triangle.

There is one thing of which we can be certain...it's extremely unlikely that we can achieve low risk, high return and high capital growth simultaneously.

If the return on an investment is high, we should never be mislead into thinking that risk will be low and capital growth will be high. You have probably heard the old cliché if it sounds too good to be true, it probably is.

 

"If it sounds too good to be true, it probably is."

 

It is important for us to remember that the main game is building wealth. We must therefore rank the three components of the triangle. 

1. Managing Risk

Number one in the ranking is protect our capital (ie the money we have available to invest). We do this by effectively managing risk. If we do not implement risk management strategies, we have a much higher chance of loosing our capital. If we loose our capital, we may not be able to continue investing. Risk management involves appropriate ownership of assets, putting in place relevant insurance protection and diversification.

 

2. Capital Growth

Number two is capital growth (ie ensuring the value of our assets increases) because without it, we are less likely to become wealthy. Maximising capital growth requires significant research, planning and subsequently buying the 'right' property.

 

3. Returns

Number three is return...in our case this means the amount of rent we receive in comparison to the price paid for the property. For example if the rent we receive is $300 per week ($15,600 per year) on a property purchased for $300,000, our gross return is 5.2% per year ($15,600 as a percentage of $300,000).

Please don't misunderstand that by ranking the components of the triangle, we are diminishing the importance of return. Rent is the life blood of an investment property.  Without it, our property investments will not survive. We do however, rank capital growth higher because it is critical to wealth building.

 

If you are serious about achieving your financial goals, procrastinate no longer...give us a call on 1300 507 559 OR drop us an email info@yourpropertybuyer.com.au and you'll discover just how easy it can be. We're happy to meet with you for a free no obligation chat and explain how we can help AND we will not do the 'hard-sell' OR stalk you afterwards.

 

"To win you have to be willing to risk some loss."

 

Here's to your property investing success.

Garry lives on the sunny Gold Coast in Queensland with his wife and two children. Garry is a business man committed to helping other achieve their financial goals.

Garry and the team at Property Buyers Australia are excited to announce thier new Virtual Buyers Agent service designed to provide sound analysis to ensure you buy the right property in the right location at the right price. Check it out here.

Need more actionable advice? Get your free weekly "to-do" list, straight to your inbox:

Name:

Email:

Next step: Check us out Facebook and join the discussion!

It's all in the numbers

This week we're going to demonstrate how to prepare a cash budget. A cash budget is a prediction of all cash coming in and all cash going out (resulting in a 'net cash' position) and is essential if you are going to achieve your property investment goals.

The cash budget provides you with essential knowledge about what you earn and even more importantly, what you spend. 

 

It is not what you earn that is important, it is what you do with what you earn.

One of the objectives in preparing a cash budget is to establish how much you can afford to pay yourself before paying anything else. In other words, you need to know how much you can set aside for saving/investment each week. This requires self-discipline.

Once you establish how much you are going to set aside for investing, you must do this first every time you are paid or receive money. Do not think about what you might spend this money on...the money is not for spending, it is for saving.

This is an essential part in developing the required self-discipline to building true wealth. Do not put it off, commence saving immediately. Remember procrastination is a major cause of failure.

 

"Remember procrastination is a major cause of failure."

If you are going to achieve true financial independence, you need to adopt a new investment paradigm by putting aside money to invest first rather than adopt the traditional approach where you invest what is left after paying your bills...and of course, this usually amounts to zero.

If you've read 'The Richest Man in Babylon' (if you haven't, you MUST), you'll remember Clason's first and second cures for a lean purse: 

 

"Start thy purse to fattening and control thy expenditure." - George S. Clason

The most effective way to ensure you understand the process of preparing a cash budget, is to prepare one. When preparing your cash budget you should put together a list of cash outgoings first.

You should then split outgoings (or expenses) into "variable" (ie expenses that change all the time, eg the cost of water is based on the amount we use and that changes consistently) and "fixed" (ie expenses that do not change, eg the amount of rent we pay on a house). This allows you to analyse the results more effectively. It is more likely that variable expenses can be reduced or controlled.

Therefore once you complete your cash budget, you should look to reduce variable expenses first. After entering all cash coming in and all cash going out, you are left with the difference which represents the 'excess/deficit'. This is the amount of cash you have left over (the excess) or the amount you will over-spend (the deficit).

When preparing your cash budget be sure to include all expenditure - including that cappuccino each day. Now get to it and prepare your budget immediately.

 

"We think in generalities, but we live in detail" - Alfred North Whitehead

Here's to your property investing success.

 

 

Garry lives on the sunny Gold Coast in Queensland with his wife and two children. Garry is a business man committed to helping other achieve their financial goals.

Garry and the team at Property Buyers Australia are excited to announce thier new Virtual Buyers Agent service designed to provide sound analysis to ensure you buy the right property in the right location at the right price. Check it out here.

Need more actionable advice? Get your free weekly "to-do" list, straight to your inbox:

Name:

Email:

Next step: Check us out Facebook and join the discussion!

You Are What You Think

Post by Garry Macdonald of Property Buyers Australia

Have you ever wondered why some folks achieve success while others 'waller in the depths of despair' - AND before you say it, YES at times there are circumstances that are beyond our control.

 

It's all in your mindset

However, while we may not always have total control over the events in our lives, we do have control over how we respond to them, it's called taking responsibility -- we have the ABILITY to RESPOND to these events in any way we choose.

The easiest possible (and it appears the most common) response, is to accept your fate - based on the cards you're dealt - however success is not reflected by how many times you get knocked down BUT how many times you get back up.

Achieving massive success in property investment is no different to achieving success in any other field of endeavour -- it all starts with a paradigm or mind set. 

"Success is not reflected by how many times you get knocked down BUT how many times you get back up."

Success is achieved through many things, not the least of which include persistence, consistency and ongoing learning. However if your mindset is such that you believe you can't do it, guess what...you are right!

 

Developing your "success mindset"

The BIG question then is...if we don't already have a success mindset, how do we change it? Unfortunately we have no definitive answer - we do however have some very strong suggestions - these are the things that have worked for us:

1. Hang around successful people or people who already have a success mindset 
2. Read bio's of successful people on an ongoing basis 
3. Attend seminars and workshops to learn all you can AND
4. Get a mentor - someone who has already achieved some level of success in their chosen field

With commitment and perseverance we can achieve anything. So go ahead and set your goals and do not listen to those who say it can't be done. If you believe it and take action, you will achieve it.

In the mean time, if you doubt what I'm saying, have a look at this YouTube video - which proves there are no excuses. If you've seen it before watch it again.

Next week, we'll discuss financial planning or budgeting. If you think the subject of numbers is boring, then I guarantee you will change your mind when you see the results.

Until then if you would like to speak with us about how we help folks like you and families just like yours achieve financial security in a low risk environment that enables you to retire far earlier than you ever thought possible, simply email us at info@propertybuyersaustralia.com.au  OR  phone our office on 1300 507 559.

"The greatest discovery of my generation is that human beings can alter their lives by altering their attitudes of mind" - William James

Here's to your property investing success.

Garry lives on the sunny Gold Coast in Queensland with his wife and two children. Garry is a business man committed to helping other achieve their financial goals.

Garry and the team at Property Buyers Australia are excited to announce thier new Virtual Buyers Agent service designed to provide sound analysis to ensure you buy the right property in the right location at the right price. Check it out here.

Need more actionable advice? Get your free weekly "to-do" list, straight to your inbox:

Name:

Email:

Next step: Check us out Facebook and join the discussion

Failing To Plan Is Planning To Fail

Do you know the importance of planning?

When we talk about planning, we're referring to goal setting. Yes we know, it's all just too hard. BUT do you understand how important it is to know where you're heading? One of our favourite 

quotes is from Alice in Wonderland:

'If you don't know where you're heading, then any road will get you there'.

We're going to assume you understand the importance of goal setting and move onto describe the approach we take. 

 

Step1: Identify five categories that are important to you.

Our five categories are:

* Family and Relationships

* Work/Business

* Financial

* Healt

 

h and fitness

* Charity

 

Step 2: Write down one S.M.A.R.T. goal under each category. 

S.M.A.R.T. is an acronym for Specific, Measurable, Achievable, Relevant and Time-bound. Here is an example of a S.M.A.R.T. business goal: 

On or before 31 December 2011 my business turnover will be $600,000. I will achieve this by providing the very best residential real estate buyers agent service in the industry. 

This goal is Specific (eg residential buyers agent service), it is measurable ($600,000 turnover), I have done the forecasts and it is Achievable, it is Relevant to our families personal goals AND it is Time-bound (on or before 31 December 2011).

 

Step 3: Monitor the progress of each of your goals.

This will determine if you need to change strategy or maybe even re-evaluate your goal. 

Now it's your turn. Go ahead and identify five categories that are important to you. Then establish one S.M.A.R.T. goal for each category. As you do this, you must commit to do what ever it takes to achieve your goals - otherwise the exercise is pointless. 

Over the ensuing 12 months, monitor your progress. If you need a hand, drop us an email at info@propertybuyersaustralia.com.au.

Next up, we'll discuss the importance of having the correct mindset AND some tactics to make the change.

"Goals are the fuel in the furnace of achievement" - Brian Tracy, Eat that Frog

 

Here's to your property investing success.

Garry lives on the sunny Gold Coast in Queensland with his wife and two children. Garry is a business man committed to helping other achieve their financial goals.

Need more actionable advice? Get your free weekly marketing "to-do" list, straight to your inbox:

Name:

Email: