An expert tells Men’s Style the essential path to building a winning property portfolio.
Let’s be honest, we’d all love a lifestyle that looks like a Pitbull music video. Bling and boats, oversized sunglasses and under-sized white suits, and waterfront property. Lots and lots of prime real estate.
But how do you think Pitbull obtained all those mansions? Through a methodical approach to property investment, no doubt. And if you follow these four phases, you won’t need Mr 305 sort of money to accumulate an impressive real estate portfolio of your own.
Step 1: The Planning Phase
Philippe Brach, CEO of Multifocus Properties and Finance, insists that those first steps from the drawing board are the most important part of the journey. “You can’t afford to mess it up!” he says. “It involves working out the boundaries of what you can do, what the options are, preparing a strategy that looks at growth, cash flows, timing and risk management. Build a team of experts to help you through this process — it’s well worth it! Typically a property advisor, a finance broker and an accountant will be able to provide you with the knowledge you need to feel comfortable with the plan.”
Step 2: The Accumulation Phase
Also known as the Pringles phase — because once you pop, you can’t stop. “It’s now time to start building a portfolio of properties that will deliver the returns you are looking for,” Brach continues. “Although your primary goal is to build capital growth, you need to keep in mind cash flow and having buffers in place. Research, knowledge and understanding are the keys to the above. By working with your investment team, who are in a position to provide many of the answers and can undertake research on your behalf, you should be well on your way.”
Step 3: The Transition Phase
Yeah, we’d all love to be sitting back in the Caribbean sipping on a mojito with Pitbull already . . . but patience is key when it comes to property, which is an investment that spans decades. “This is the point where you are no longer buying properties but are holding on to those you have, maintaining and managing your portfolio, and waiting for growth over time. It’s important, during the Planning Phase, to allow sufficient time for your properties to appreciate in value, making allowances for unexpected short-term slumps in the market. Investing in property should be considered as a long-term venture, to maximise the benefits and rewards. Typically, the transition phase is the longest (and easiest!), as your main ingredient is time.”
Step 4: The Drawdown Phase
Righto, now it’s mojito time. “This is when you finally reap the benefits of your investment journey,” Brach says. “The equity you have been building in your portfolio is released, usually by selling some of the properties to repay the debt on the ones you keep. Then enjoy an income stream from your debt-free properties, which are still exposed to capital growth.”
For more tips on how to build your own property portfolio, visit www.multifocus.com.au