What's the right property model for you?

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Are you considering taking on a Renovation? Perhaps you want to be a Developer, or maybe get into Property Options? Here's a way to help you find a Property Model that matches your skill set, available time, and current financial situation.

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Transcription

Phil:

Hi, I'm Phil from LifeCorp, the home of street smart property investors.

Are you thinking about becoming a property investor? Or perhaps you're still trying to decide what's the right property model for you. Are you thinking about becoming a renovator, or a developer, or getting into options? I'm not sure what you're currently thinking, but I'm going to give you a little bit of an insight into how I would go about deciding what's the right property model for you.

Here's a real quick way to peel apart the various skills, and the various attributes you may need for each of those property models. Let's decide that we're going to start by becoming a renovator. In the case of being a renovator, you may find that your skill level needs to be at a certain height.

You're definitely going to need to have access to money. In every development that I've done, or sorry, every renovation that I've done, I've always had to dig deeper into my pockets than I ever expected. Somewhere amongst that, your ability to put your hands on money would need to be fairly strong.
Obviously, you're going to need to have a lot of time on your hands. It may be a second job. It may be a romantic idea at the start. "Come on, darling, let's link arms and get a paint scraper out on the weekends," and all that romantic stuff. Well, guys, you need to expect it's going to take you a lot of time.

Then there's always an element of risk. You may think you're going to flip, and you're going to be able to get a great return, but we've all seen, even from recent series of The Block, it can be a lot of effort for not a lot of reward, in many cases. Obviously there's a risk factor.

If it was going to be doing options, the skill level may be higher again, because that can be a very skilled area that you need to be able to put up with rejection, and be very convincing, and have very good skills levels to negotiate those deals. Perhaps you can do it with less money, though. Perhaps you can save yourself a bit of money there, and use smaller options, and try to put deals together with a big upside.

Time would be high, very high, because you've got to be prepared to put in a lot of hours. Ten times out of ten, I would say it's going to take a lot longer than you probably expect. I've seen those option type deals take years to be able to pull together.

The risk factor may be lower.

These are some of the aspects that I would consider when I was looking at what would the right fit for me, as a hands-on property model for me. Over the years, I've done a lot of stuff. I've owned commercial properties, residential properties, industrial properties. I've developed. I've renovated. I've done a whole range of different things. Holiday let. A whole range of different models, and now what I've found, is I want to basically keep my levels leveraged. I want to keep everything really low. I want to make sure that my holding cost costs me less than $10 a week, less than $20 a week at absolute most, and I use $1 deposits to buy my properties. I like to use no more than one hour a month to be able to manage my property portfolio. I always like to leverage everything that I do to keep the risk factor low.

In many ways, if you look at the property model that I have, you would probably think of me as a lazy investor. The reality is, in most of the models that I've seen around Australia, all looking for an education, property models, for renovations, wraps, developments, options, out of every 100 people in the room, if you could find five people out of 100 that get a great result and get great traction, they're usually the ones that become the testimonials as to what's possible, but there's definitely a low do-ability factor.

In the model that I've put together myself, of every 100 people, and I've proven for every 100 people coming through my model, 70%+ have experienced exactly this within the first 12 months alone. $1 deposits, less than $20 a month holding costs, very easy, very leveraged. It's the difference between an income model, which is creating a second job, and it's about creating wealth through property, which is obviously the other option, letting other factors do the leverage for you.

Guys, I think there's a more comprehensive way of looking at this, I just wanted to break it down pretty simply, but it is very important you do match the property model to what time you have, what risk tolerance you have, the skill level you have, and obviously how deep your pockets are.

Good luck to you with whatever it is, but if you're going to be a property investor, my strongest suggestion is, if you can't buy a property with your lunch money, don't buy it.

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