16 May Investing In Your Education
With over 30 years’ experience in the property industry, Bob Andersen has been involved in everything from land subdivisions and spec houses to shopping centres and retirement complexes.
Your Investment Property talked to the founder of Property Masterminds, who now spends much of his time teaching other Australians his own ﬁne-tuned method for success – and he says it all starts with a solid education.
Bob Andersen has been involved in more than 2,700 property developments Australia-wide
What would you say is the most common mistake made by less experienced investors?
The most valuable and in fact the first investment anyone should make is in themselves – by that I mean invest in self-education.
This really is the information age, and with so many books and courses available there is no excuse for going into property investment blindly.
If you could give one piece of advice to less experienced investors, what would it be? Do your research. It amazes me that many investors do
more research choosing a holiday destination than they do purchasing a property worth a hundred times as much.
So many people look at property investment as a passive long-term play and therefore believe that they can buy anywhere, set and forget, and everything will turn out rosy in the end.
To a small extent, that can be true, but with the right education investors can do far better than that. Understanding demographic and social changes, historic growth, infrastructure expansion, rental yield movements, supply and demand, and building approval numbers can enable the educated investor to continually acquire higher-performing investments.
What is the most valuable thing Property Mastermind offers potential investors?
Through my property development course, I teach normal everyday people how to undertake small, profitable property development projects. They can then create great cash flow by selling their properties, or build a large property portfolio quickly by holding their properties as long-term investments on completion.
“Many investors do more research choosing a holiday destination than they do purchasing a property”
They can then create great cash flow by selling their properties, or build a large property portfolio quickly by holding their properties as long-term investments on completion.
I also teach a range of creative strategies whereby investors with little or no money can still undertake property developments. Several of my students are developing over $20m worth of projects with little or none of their own money in the deal.
It’s not accidental that the wealthiest people in property and those with the largest low-geared property portfolios are usually property developers. That is because property developers create investment properties at absolute raw cost.
By way of example, property developers regularly create their own investment properties worth, say, $700,000 for a cost of approximately $560,000. My question to investors is: Who wouldn’t want to save $140,000 every time they buy a $700,000 property?
In your eyes, what is an ideal investment property?
Hypothetically, at least, it’s one that displays consistent capital growth, an above-average income stream, requires minimum maintenance and offers good depreciation. The question is, of course, how do you get everything in one investment? As a property developer, you can do what the rest of investors can’t do: create your own investments at a substantial discount to the retail value. Firstly, choose the correct location. Look for opportunities to increase rental yield, for example rent by the room, or have more bedrooms.
By developing your own investment properties at absolute raw cost in good locations, you can look forward to good capital appreciation, a good rental yield (based on cost price), minimum maintenance, and good depreciation from new properties.
How much money does an investor need to get started as a developer?
To successfully undertake a property development, you need knowledge and access to money – not necessarily yours. Through Property Mastermind, I supply the knowledge and coaching, and through my creative strategies component I teach you how to undertake projects with little or no money of your own.
Being alive is one thing, but living life on your terms and creating a great lifestyle for yourself and those around you has to be the ultimate outcome. For that you need time, a great cash flow, and a rapid wealth creation vehicle.
Property development has done that for me and it continues to do the same for those in my property development education system.
WHAT IS THE IDEAL DEVELOPMENT LOCATION?
- Capital cities or large regional cities and towns show the most potential, while mining towns and holiday towns without a secondary industry should be avoided.
- Proximity to infrastructure is valuable, particularly railway stations and bus interchanges, as well as large or regional shopping centres.
- Coffee and restaurant precincts are a bonus when searching for ideal investment locations.
- Proximity to hospitals and universities can also be valuable, as it’s possible to rent by the room to medical staff and students.
- Catchment areas for in-demand schools can add a premium and enhanced profit margin for the savvy developer/investor.