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Investing outside your backyard

We explore something that we commonly forget about or have fears of, “Investing outside your backyard.” A shift in the mindset, engagement of the right professionals and a removal of emotion can help you become a #BorderlessInvestor
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Transcript

Hey everyone. It’s episode three of The Board, okay. Today’s session is all about investing outside your backyard. Before we go into today’s session I want to talk about the property market. Now, not to make any comments on them, but just the thought, when you think of the words, property market, and then someone makes a comment on it. So, let me give you a quick example.

Let’s just say there’s someone who’s bought in sydney a few years ago, and has two or three properties. They’ve invested inside their backyard, or near their backyard, just because they’ve found it comfortable. The feel, the touch, the emotion. One of the key points in today’s session that we’ll go through. A few years ago they would’ve been saying the property market was going really well. 

Now, if you flip that and have the same person have the properties in Sydney, and maybe they’re just looking to purchase it today, or they have some in their portfolio, or in Melbourne. You might hear them say, “The property market’s not going too well. Come on, prices, I’m not happy with them. The market’s just not going too well.” At the end of the day, it’s actually just a reflection of that person who owns the property in those areas. That can be, sometimes, the dangers of having everything in one basket, because that person who has everything in that one basket is referring to it as, “The market.” When really, it’s a property in a couple of suburbs in one city, out of many states, in one country. Which is huge, right? 

When we think of the words, the property market, we’ve got to be careful, and think that, Tasmania, a house. South Australia, a unit maybe. Brisbane, a particular house in a suburb. When we think of these three things, they’re all having different demand and supplies in their respective suburbs. Sometimes in the streets, cities, states. So, they’re all going to perform differently. 

Now, there are some factors that influence property markets as a whole, but I just need you to realize that when we’re talking about the property market you’re not actually buying all of Australia when you invest. So, that’s some of the things to think of when we go through today’s topic. 

Investing outside your backyard. I have put it down to six areas here, that we’re going to discuss, and that refer back to the emotion when buying. Some of the difficulties that people find in buying outside of your backyard is the emotion itself. “I can’t feel it, I can’t touch, I can’t go and see it, and it doesn’t fulfill me because I’m not sure how it’s going.” But really, there are a few things on this point that actually go the same regardless whether you buy it down the road, or in another city, in another state. 

Let’s go through point one. So, your buyer’s agent. A buyer’s agent can really give you different results on where you’re investing based on a few things. Have they got the personal experience as your agent to invest across multiple states, multiple cities, suburbs, whatever it may be? Personally, I’ve invested in nine properties across four states. That gives me a bit of an understanding of the different growth I’m receiving on my portfolio in different parts of Australia. Okay. 

Now, licensing is another part. But, before we go into licensing, they’ve also actually had the experience, not only for themselves, but the experience for the customers. Are they purchasing all in one city, one state, or are they purchasing in other areas? They’ll also help you with the experience of gaging where can I invest? Am I investing outside of my backyard? Am I going to be able to do that with this person I’m dealing with?

Second is licensing. When we look at licensing, are we looking at someone who’s licensed in one state, or across multiple? At InvestorKit we’re licensed in almost every single state bar one, and that’s helpful for us to be able to look at researching in different markets, support our customers in different markets, and get the asset that’s suitable for them in their particular journey. Now, it’s not to say that a buyer’s agent who is only licensed in one can’t get you a great outcome, because when they are licensed in a state they actually have so many cities within a state, different suburbs, that all have, again, their different performances too. There’s just an understanding though, from a buyer’s agent, how they can help you get rid of that emotion when they think of their experience, licensing and so forth, to help you invest outside your backyard. 

Okay, number two, the solicitor. Similar to the buyer’s agent they’ve got certain experience of doing conveyancing. Some do a lot in Sydney, some maybe do some split across different states. The same sort of thing as a buyer’s agent, can help you get the experience to make sure you’re dealing with someone that is, A, licensed, but also has the experience to be able to look into different states, different cities, and ensure that they’re crossing off the checks in the right area. Appropriately managing risk is pretty important, and a solicitor with that experience can help you out. 

A pest and building inspector. Now, obviously outside your backyard it makes it difficult for you to go see it, you to go touch it, feel it, know all the checks. But, in all honesty, even if you go and check it, even if you go and look at it, do you know the things that could be wrong? The things to check? The things to look at? What’s good, what’s not good? 

Well, this is why we hire the professionals. I personally like to work with professionals, because even as a buyer’s agent with my knowledge, or the team’s knowledge, when we’re looking at pest and building inspectors they can help you get to that place. Get a visual from their report, look at the problems, and then move onto tradesmen, potentially, to help you understand the potential costs. So, you’re actually taking the emotion out of it, because even if you were there could you really spot all those? Could you look at all those? Would you know what to do with all those issues and things in there? 

Okay. Finance. This is interesting. Does your finance change if you have a loan in Sydney for a property? Or, a loan in Melbourne, or Brisbane? Sure, there’ll be different lending restrictions in different suburbs and postcodes, but when you look at your [app 00:06:06] it’s the same as wherever you purchase. A loan is a loan, an interest rate is an interest rate. Those things don’t change when you invest down the road, or invest in the other side of the country. You’re going to be able to look at that and help yourself in there. 

Property managing. You know, they’re hired for a reason. Sometimes we actually hire them in the city we live in but still go and check on the place, because it’s such an emotional purchase, and we’ve got so much emotional tie to it. We’re paying someone as a professional to look after it, take the stress away from us, yet, we’re still stressed and must go check it out. These are the things that actually help you when you’re investing outside of your backyard, because you’ve got professionals looking at it, it’s more difficult for you to go do it, and you sometimes actually place more trust into that professional to help you out. 

Now, at InvestorKit we actually help our clients manage the back property manager, so you learn how to, not only just have a property manager, but work closer with them so you can have a successful relationship going forward. Lastly, the bank account, similar to the point of the finance. When you receive the money from your rent is it any different, because last time I checked the money you received from a property down the road, and the money you received from a property in Brisbane, or Cannes, or Perth, it’s all the same. The money coming in your bank account is the same. There were varying different amounts from the investment, but it’s the thought that the money is still the same.

So, these are some of the things that we need to go through when we’re looking to invest outside of our backyard. Are we engaging the right professionals with the right experience? Are we sometimes even engaging professionals? And, are we getting our mindset right to work with the right people in the right way, and forget that the loan and the bank account are still the same. 

Again, I mentioned I’ve invested, around four states, across nine properties. That’s helped me diversify and get different results. Let’s get the emotion out of the purchase, get the professionals engaged and focus on the numbers to get you there for wealth creation. So that’s it from us, InvestorKit, the experts in wealth creation, helping you take action.