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Why investors get stuck and can’t grow their portfolio

Only a small proportion of property investors end up building multi-property portfolios, so what is holding a majority of investors back? What are the mistakes that some investors make, and how can you avoid these pitfalls?

Our Managing Director, Damian Collins, was invited to speak on this topic on Smart Property Investment magazine’s ‘Inside Word’.

Hear what he had to say in the video above and transcript below.

 

“One of the biggest mistakes we often see with investors who are trying to grow their portfolio quickly is that they focus on yield. Now yield is obviously very important. It helps the servicing and a lot of people start to hit that servicing wall when they get about the second or third property.

But while yield is very important, if you chase a dud property that’s not going to grow in value for you, then while you might be getting a slightly better yield, if it doesn’t grow in value you’re not going to be able to generate that additional equity.

So, the better thing to do is look at the existing property portfolio that you’ve got and figure out ways to get better yields from that rather than chasing a high rental yield location in what might be a sub-standard growth area.

In terms of other mistakes that investors make, some of them actually give up. They actually find that ‘Well you know what, I’ve got a couple of properties. I’ve hit the wall,’ and they even end up sometimes thinking about selling some.

So really, property is a long term journey. While everyone wants to get rich quickly, you’ve really got to focus that it is a long-term journey. Be prepared sometimes to sit for a couple of years if you can’t get into the market. But ultimately, if you buy the right properties in the right locations, you get the right tenants, you’re going to do well and make a lot of money over the long term.”

 

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