Paul Glossop: Good day guys and welcome to Pure Property Investments one on one. Today, I’m here with Aaron Christie-David. Aaron is the director of Atelier Wealth. What we wanted to discuss today Aaron if you don’t mind is probably talk a little bit more about is, I’ll call it the hidden threshold of property investors getting to one or two properties and maxing out, tapping out or not being able to access finance for whatever reason, not getting pass that two investment property position these pretty staggering statistics that show that that is kind of where the majority of investors get to. I’m hoping you might be able to share a bit of insights into so why and how people or investors probably get to that limit and don’t get any further.
Aaron Christie-David: Yeah sure. We’re on a fairly fortunate position where we can sit in front of investors and what are you doing and what’s the plan for a longer term? Most people say, they want to build a portfolio, which is great, but then they hit a wall. ATO statistics will show that there’s two million investors, property investors in Australia. So, off that two million, 75 percent or 750,000 will have an investment property, which is great. They’ve taken some action. The number start to drop off. Say if we get to people that own three investment properties, that is about 119,000, which is about 6%. Then alarmingly you get to the top 1% which own six or more investment properties, which are about 19,000 Australian Investors.
Paul Glossop: Amazing too see how much it drops off at each level.
Aaron Christie-David: It is. That’s right. And then we start to unpack I guess why and why has some people done very, I guess those top 1 percentile, what have they done well compared to the other say 99% of the market. And some people genuinely don’t want to build a large portfolio, which is fine. Get into the market, you’ve achieved what you wanted to, which is great. I guess what I see from some people, they don’t have a strategy. So, that classic saying “Know what you own and why you own it”, becomes more pertinent as you are growing your portfolio as well. Another one is they have a limiting mindset. So they get scared by the amount of debt that they are taking on as well and again, it’s good debt versus bad debt. This is all deductible debt and you are buying a property which really should be all growing from a capital growth point of view as well.
The next part is having a team around them that really encourages and supports them. So, if you treat investment in property like a business, you really want a team of professionals around you. So you want the accountant, you want the buyer’s agent, you want the broker, you want the financial planner, in short, specialists depreciation as well. So you start to see that everyone has a role to play in helping you achieve your goals as well.
And the next part really is who are they surrounding themselves with? Finding an investor who has tread the path that you want to, I mean, some people will take advice from friends or family who haven’t bought an investment property. And I say, what have they done and they are getting inside your head a little bit as well. And that may pull you back, which is unfortunate as well because that is their circle of influence. I think if we keep that on its head and say, what are our best investors doing? They know their numbers. They know them inside and out. And if they don’t know their numbers, they will call one of us to get those straight away. So, what’s my yield? What’s my capital growth? What’s my property value that now for example and they’re really they’re pushing the boundaries to maybe grow it, or maybe just optimize their own portfolio as well, which is great. And they have a very clear strategy, which we kind of stress from the very beginning. So, they know what they want to do. And as soon as that relentless pursuit of achieving their goals that really puts them on that top anywhere from 5-10 percent of Investment Property Experts in Australia as well, which are dream clients.
Paul Glossop: Absolutely, like what you said, I think the key there is there is a lot of water that goes under the bridge for those investors who have probably… and again, going back to probably unpack it this way saying, “Just because there’s only 19,000 investors who own six or more properties doesn’t mean that everyone should be aspiring to that. It doesn’t necessarily say that 19,000 people are doing better than everyone else because there might be people who are out there who don’t need anything more and they’ve already hit their objectives and their strategy.
However, statistics will show that majority of these people who are buying one property don’t go any further, do want to buy another property but they don’t know how when or why. And that what comes down to is ultimately the right advice, the right team, the right structures.
Aaron Christie-David: And most important is the property itself. So there’s no point getting into the market if that property bought is going to restrict your ability in the future because that is ultimately detrimental to scaling your portfolio, even just having a successful investment property in itself.
Paul Glossop: Absolutely. I actually wrote an article probably six months ago about the rise and rise of people buying themselves out of the market. And it really comes down to buying without a strategy or buying without an objective is quite possibly the worst thing that you could do. We talked about taking action and how important it. But taking action when it’s eventually jumping off a cliff without understanding if it’s water below you or dirt, you wouldn’t do it. And you really want to make sure with potentially the biggest financial decision you got to make, you really want to know a little bit more about why you’re doing it. How it’s going to happen or potentially getting the advice to say, this is how, why and when. And I think, that key part that you mentioned is the circle of concern versus the circle of influence, is such a key part when it comes to property investors and I could tell you that I don’t know any successful property investor with three, four, five, 50 properties or more, who doesn’t have a team of people, whether they be people that they just pay or just peers who are also in the game and they take advice from people who’ve done it and learnt and made mistakes and learnt how to make sure that they do it better. Make sure you’re teaming yourself up with the people who know rather than people who have an opinion for the sake of an opinions sake. And Australia is full of them unfortunately when it comes to property space and it is one of our birthrights. But that doesn’t mean…
Aaron Christie-David: Great investors are willing to share their experience. They actually want to share. They jump on forums maybe or you read investor magazines, or even speak to experts and we can introduce our own clients to our other clients and say, have them ask them how they’ve done it? And they will be happy to share their secrets.
Paul Glossop: Exactly, and most of the time, when they unpack it, it’s not that complicated. But the best investors, they’re usually pretty diligent, they’re pretty strict in what they do and how they do it. The vast majority of the time, They’re not too complicated either. They’re pretty much saying, here’s what I buy, here is why I buy it. They don’t look for the best deal ever and try to do some sort of multi-high rise development in their first, second or third purchase. They’re pretty much going to be a slow and steady approach and build up their wealth and that’s going to be incrementally and it’s going to be pragmatic.
Guys, there’s a lot that we’ve talked about there. Then again, there’s probably a lot more that we could talk about in that forum but the best way forward from that if you do want to talk about anything further or there’s anything that resonates with yourself, feel free to contact Aaron at his details below and you can contact at our office, anytime on our contact numbers below as well. And no doubt, we’re going to catch up with you soon, Cheers!