How To Work Smart, Not Hard, To Achieve Success In Property Investment
The concept of working smart not hard is something that has really caught my attention lately. There are so many things we do in our jobs and our day to day lives where we work hard but don’t achieve many results.
If we work smarter, not harder, it is possible to achieve better results with less work in every single area of our lives. This includes our investments.
Steve McKnight touches on this in his must read book From 0-130 Properties in 3.5 Years where he goes into detail about one of his first investments where he worked hard but not smart.
He and his investment partner purchased a property that they were going to renovate. They worked hard, slaving away to get the renovations finished. When they finally completed the property and sold it they made money. But when they calculated the money made vs time spent they could have made more money per hour working a McDonalds than working on that property.
This causes Steve to really think about his strategy and to focus on working smart not hard.
I wanted to touch on 5 tips to keep you focused on working smarter not harder. The smarter you can work the richer you will become and the less hard work you will have to do.
1. Have A Focused Strategy
An average investor doesn’t have a strategy. They just buy a property that they like and hope to make money. This is a sure way to work harder not smarter.
Great investors get focused and have a specific strategy. Look at Steve McKnight, he focused on positive cash flow property and managed to purchase 130 properties in under 4 years. He could only achieve that by working smart.
Find out exactly how you want to make money in property and focus specifically on that strategy.
2. Discard Properties That Don’t Meet Your Criteria
Once you choose your strategy you need to decide on precise purchasing criteria for the type of property that you want.
Set your price range, the areas you would consider, what features you want and what you are willing to compromise.
Then go out searching and immediately discard properties that don’t fit your criteria. You have already decided that your criteria has the best chance of bringing in a solid profit so why waste your time running numbers on properties that don’t have into your predetermined features. That would be an example of working hard, not smart.
Stay focused so you can find and buy exactly what you want without spending many hours (and many thousands of dollars) looking at an investing in something that isn’t going to bring a great return.
3. Don’t Get Distracted By Another Strategy
It is so east to get distracted by “the next big thing.” As humans we are always looking to make a quick buck and take the easy way out. But don’t fall for this trap.
Getting distracted by the ‘new’ and ‘fancy’ strategies out there will only take you away from achieving your goal. You will spread yourself too thinly and as a result you will work hard, waste a lot of time and get no where.
Instead of getting distracted do tip #4 below:
4. Become an Expert In Your Strategy
Choose your strategy and then become an expert in it. Read books, go to seminars and learn exactly how to be a master at your chosen strategy.
Take massive action and learn from every mistake you make. As you get really good at your chosen strategy you will find it easier and easier to find great deals and you will make more money by investing less money.
Check out forums like www.PropertyInvesting.com and get involved. Learn from people who have done it before.
It is almost always more profitable to focus on one strategy and get really good at it, than to be average at 10 different techniques or strategies.
5. Get People To Do The Hard Work For You
In property there are some things that cannot be avoided. You need to find potential properties, find out if you want to purchase them and follow up on finances on your current properties to make sure you a maximizing your return on investment.
However, it is possible to get other people to do the hard work for you.
You can let real estate agents know exactly what you are looking for and then they can alert you when a potential property comes on the market. It can mean a quick sale (and commission) for them and can save you a lot of work.
You can also hire virtual assistants who work for you from $1-$5/hour from ODesk who can search through properties for you and send you and email with potential properties can you can flick through on your phone. It might cost you $40 but can save you loads of time. Be sure to interview them well and make sure they understand exactly what you want before hiring them and leaving them to their devices.
3 More Specific Ways For Working Smarter
I also wanted to quickly cover 3 more specific ways you can invest smarter and not harder. Hopefully these 3 tips will help you reach your goals quicker no matter what strategy you are using.
6. Interest Only Loans
Interest only loans are a great way to increase cash flow on a week to week or month to month basis. As you are not required to make payments on the principle your monthly expectations are much lower.
If you are investing for cash flow then this can easily add hundreds of dollars per month to your cash flow. This money can then be used to save an invest in new property, or to build a buffer fund for emergencies, or to live off.
You can still pay down the principle by using an offset account. The great thing about this is that you can lower your repayments even more (increasing your cash flow) and you have free access to your money when your next investment comes along.
7. Leverage To Reinvest
Many investors use the power of leverage to reinvest their profits and buy more property.
When a property goes up in value the difference between what you owe on the property and what it is worth is called your equity. You can borrow against this equity (usually up to 80% of the value of the property) and then use this money as a deposit to buy another property.
You can the be achieving capital growth (and cash flow growth) on multiple properties instead of just one. Now that is a smart idea.
8. Positive Cash Flow Property
Is your ultimate goal financial freedom? The ability to live day to day on a good income without ever having to work or worry about where that next pay cheque is coming from?
If it is then maybe working smarter would be buying positive cash flow property. Property that makes you more money than you pay in expenses from day #1.
You could then move to financial freedom just by buying more positive cash flow properties, you wouldn’t even have to wait for the market to go up.
When you own positive cash flow property and rents increase almost all of the rental increase goes into your back pocket. This is because your major expense (your mortgage) stays relatively the same. So if your property is generating $10/week positive cash flow and the rent goes up an extra $10/week it is likely you would now be around $17/week positively cash flowed. Over time this builds up to a lot more money, often enough to retire off.
If you are interested in positive cash flow property then read my reviews on the top 10 positive cash flow property books.