The Way to Invest

Myself and Joni Kikil, our portfolio manager have sat down with around 100 investors over the last 6 weeks, and a common theme throughout has been investors not being sure what returns on their investment they are achieving, and therefore their ideas on what properties are performing best are often not accurate.

By looking at many varied portfolios it is amazing to see all the different strategies and performances of different portfolios.

What return would I be looking for across the board? I would be looking for a minimum of 30% returns per annum on investment ie my equity to increase by a minimum of 30% per annum.

So if you have a portfolio worth £1 million with £300,000 in equity, you would be looking for your equity to have risen to £390,000, ie your portfolio to be worth a minimum of £1.09 million, assuming a neutral cashflow, this is crucial, as if you have had negative cashflow you will require a higher return on capital growth, vice versa if you have had a positive cashflow, you may not require quite as high capital growth. (more…)

Popularity: 54% [?]

How do you know if property investing will work for you? If you have a keen interest in real estate and would like to gain financial freedom through passive income … you have found the most suitable vehicle to a life of grown-up Monopoly! Did you always enjoy playing Monopoly as a kid and later as a grown-up? Does not matter how many times you were beaten, bankrupt or even stealing money from the ‘bank’, you always came back for more. Maybe this time you will acquire the choice properties, landing every unfortunate player on your hotels - everything decided by the roll of the dice.

Luckily real life is not decided by the roll of a dice, allowing you to gain equal access to every choice property out there. You just have to go and look for it. Take the scenario where you find a rental property with appraisal value of $100,000 and a selling price of $80,000. Monthly installments on a 80% mortgage amounts to $1,000 (for clarity sake), with a rental income of $1,800 - giving you an estimated positive cashflow of $800 per month (neglecting other deductions in this example for simplicity). In other words, after your 20% cash deposit, the property will pay for itself, in excess of an extra $800 cash in your pocket every month! You will not get this when buying a car, boat, golf clubs or any other luxuries. (more…)

Popularity: 50% [?]

Understanding the Opportunity Cost of any decision you make is critical to ensure you make the best choices to maximise your profits, and ultimately your long term earnings. While most investors have got involved in property investing because they understand the opportunities to make money through leverage and capital growth or high yields, I still see and hear of many who do not fully understand opportunity cost and therefore do not maximise their profits.

Remember anyone that gets into property is usually in it to generate money or income, how many deals/properties you own is insignificant, but I meet some investors who feel it is all about buying as many properties as they can and never selling, irrespective of performance or other opportunities.

So what does opportunity cost mean? (more…)

Popularity: 26% [?]