{"id":6156,"date":"2018-05-27T09:39:04","date_gmt":"2018-05-26T23:39:04","guid":{"rendered":"http:\/\/www.catebakos.com.au\/?p=6156"},"modified":"2018-05-27T17:00:21","modified_gmt":"2018-05-27T07:00:21","slug":"whats-your-why","status":"publish","type":"post","link":"https:\/\/www.catebakos.com.au\/staging\/whats-your-why\/","title":{"rendered":"What&#8217;s your &#8216;why&#8217;?"},"content":{"rendered":"<p class=\"lead\">I presented recently to a crowd of interested property investors and as I always find, the answers at the end of the presentation were varied and thought-provoking.<\/p>\n<p>People often ask&nbsp;<em>situational<\/em> questions that give me an insight into what they are considering, what they&#8217;ve already signed up for, or what has perhaps frightened them.<\/p>\n<p>It&#8217;s no surprise that one of the most common questions I receive at these nights goes as follows;<\/p>\n<blockquote><p>What is the best place to buy in?<\/p><\/blockquote>\n<p>And even if I wanted to give someone a short and punchy tip for assured growth, I&#8217;d be doing them a complete injustice without having any background knowledge of their personal situation. Most importantly, without understanding their&nbsp;<i>why,<\/i> my hot tip could not only land them in trouble but it could derail the lifestyle they ultimately want.<\/p>\n<p>Property investment has so many moving parts to consider; it is never just a solution to deliver short-term capital growth.<\/p>\n<p><strong>Some of the worst strategies are founded on an unrealistic expectation of short term performance.<\/strong><\/p>\n<p>They include (but aren&#8217;t limited to) the following;<\/p>\n<ul>\n<li><strong>Picking a &#8216;boom area&#8217; on the basis of one exciting infrastructure project.<\/strong> If the project is shelved, reduced or moved, the boom town can quickly turn into a ghost town. Not only will the rental demand disappear but the equity position will likely be negative. The implication of this when obtaining finance for future investing is dire.<\/li>\n<li><strong>Buying a house to do a quick-flip on.<\/strong> Some people manage this well, but the reality is that stamp duty, renovation costs, labour costs, financial &nbsp;holding costs (particularly when project delays strike), agent&#8217;s fees, marketing and selling costs, capital gains tax and legal fees all bite into any profits. In a positive trending market the profits are aided by growth, however in a negative trending market this strategy can prove to be a nightmare.<br \/>\n<img loading=\"lazy\" decoding=\"async\" width=\"639\" height=\"469\" class=\"alignnone size-full wp-image-6159\" src=\"http:\/\/www.catebakos.com.au\/wp-content\/uploads\/2018\/05\/flip-strategy-drawing.jpg\" alt=\"#flip Strategy Drawing\" srcset=\"https:\/\/www.catebakos.com.au\/staging\/wp-content\/uploads\/2018\/05\/flip-strategy-drawing.jpg 639w, https:\/\/www.catebakos.com.au\/staging\/wp-content\/uploads\/2018\/05\/flip-strategy-drawing-300x220.jpg 300w\" sizes=\"auto, (max-width: 639px) 100vw, 639px\" \/><\/li>\n<li><strong>Selecting a new subdivision on the basis that growth is imminent &#8216;because a community will be created&#8217;.<\/strong>&nbsp;Being mindful of the&nbsp;<em>reasons&nbsp;<\/em>why a new suburb will take off is essential. Is it based on <i>desirability&nbsp;<\/i>or&nbsp;<i>affordability?&nbsp;<\/i>Just because Bunnings is going in doesn&#8217;t mean that the area will sustain out-performance growth. Areas experience out-performance capital growth when the household incomes are trending upwards. When wealth comes into an area and heftier wallets are competing for property, prices will naturally go up.<\/li>\n<li><strong>Collecting over a hundred properties offering positive cashflow.&nbsp;<\/strong>This strategy works for some but it&#8217;s not for the faint-hearted. One hundred properties spells one hundred tenants (all things going well!), and one hundred tenancies in a&nbsp;<em>difficult&nbsp;<\/em>socio-economic area can represent one hundred headaches. Being clear on the downside to such a strategy is imperative.<\/li>\n<li><strong>Signing up for an off the plan property with a teeny-tiny deposit<\/strong> <strong>down.<\/strong> I can&#8217;t stress highly enough the caution that people should exercise with such a strategy. Imagine the stress levels associated with a valuation shortfall of over $100,000 when the whole reason for targeting the apartment in the first place was that only $1,000 was required as a deposit? Being told to find a magical $100,000 in the final month prior to settlement is a nasty shock for anyone, let alone a deposit-sensitive first home buyer. The percentage of valuation shortfalls adversely impacting off the plan apartment settlements is double digit in all of our capital cities.<\/li>\n<\/ul>\n<blockquote><p>Asking &#8220;What&#8217;s your <em>why?&#8221;<\/em> is the first question I start with.<\/p><\/blockquote>\n<p>Some investors what to build a passive income stream to sustain them during retirement and assist them into a phased retirement with&nbsp;<em>choice<\/em> and&nbsp;<em>options.<\/em><\/p>\n<p>Some wish to retire early on a strong income derived from sale profits (after tax is factored in).<\/p>\n<p>Others like the idea of amassing a portfolio that organically dissolves all debt via strong rental returns over the years.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-6162 alignleft\" src=\"http:\/\/www.catebakos.com.au\/wp-content\/uploads\/2018\/05\/jumping.jpg\" alt=\"#jumping\" width=\"152\" height=\"191\" srcset=\"https:\/\/www.catebakos.com.au\/staging\/wp-content\/uploads\/2018\/05\/jumping.jpg 461w, https:\/\/www.catebakos.com.au\/staging\/wp-content\/uploads\/2018\/05\/jumping-239x300.jpg 239w\" sizes=\"auto, (max-width: 152px) 100vw, 152px\" \/>Many parents choose to do it to help their children. Whether it be teaching them pro-activity, handing them an asset in future years, or building an estate, the intent is there to provide for their children and possibly future generations.<\/p>\n<p>Me&#8230; I engineered a property portfolio for long term, future wealth and a passive income into retirement. I want to make sure that every day is lived to the fullest. Travel, time with my loved ones, happy times and making sure we&#8217;re able to get the education, health care and comfort we seek when we most need it is why I&#8217;ve invested in property.<\/p>\n<p>Pending <strong>incomes<\/strong>, surplus <strong>cash flows<\/strong> each month, future <strong>expenses<\/strong>, desire to <strong>travel,<\/strong> and th<strong>e<\/strong>&nbsp;<strong>time<\/strong> remaining until retirement, my advice will vary for every investor.<\/p>\n<p>The two worst&nbsp;<em>why&#8217;s<\/em> are:<\/p>\n<ul>\n<li>because I want to make a fast and large amount of money, and<\/li>\n<li>because everyone else is doing it<\/li>\n<\/ul>\n<p>Property investment needs careful planning, resources to actually do it, an adequate amount of&nbsp;<strong>time<\/strong> in the market, and a genuine <strong>reason<\/strong>.&nbsp;<\/p>\n<blockquote><p>What&#8217;s your<strong><em> why<\/em>?<\/strong><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>I presented recently to a crowd of interested property investors and as I always find, the answers at the end of the presentation were varied and thought-provoking. People often ask&nbsp;situational questions that give me an insight into what they are considering, what they&#8217;ve already signed up for, or what has perhaps frightened them. It&#8217;s no&#8230;  <a href=\"https:\/\/www.catebakos.com.au\/staging\/whats-your-why\/\" class=\"more-link\" title=\"Read What&#8217;s your &#8216;why&#8217;?\">Read more &raquo;<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ngg_post_thumbnail":0,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[10],"tags":[],"class_list":["post-6156","post","type-post","status-publish","format-standard","hentry","category-sundayblog"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts\/6156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/comments?post=6156"}],"version-history":[{"count":10,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts\/6156\/revisions"}],"predecessor-version":[{"id":6169,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts\/6156\/revisions\/6169"}],"wp:attachment":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/media?parent=6156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/categories?post=6156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/tags?post=6156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}