Introduction: How to Grow a Multi-Million Dollar Property Portfolio – in your spare time

When I first wrote the first edition of this book one of my aims was to give ordinary Australians a system to become wealthy through residential property investment. While there was lots of information out there, much of it was misinformation. That’s one of the reasons why the majority of people who become involved in property investment are not successful in building the financial independence they are seeking.

The truth is most property investors only manage to buy one or two properties and less than one in two hundred investors ever buys five or more properties.

Owning one or two properties isn’t really enough. To become financially free you need to own a multi-million dollar property portfolio. This means that most Australian property investors will never get the financial independence they deserve. It also means that if you do what most property investors do, if you invest the way most Australian’s invest, then you will get the same results most Australian property investors get! And you want better than that don’t you?

One of the realities of life is that despite living in one of the richest countries in the world, most people today are struggling financially. And since our world was plummeted into the Global Financial Crisis of 2008/09, the gap between the wealthy and the average Australian only seems to be getting wider.

Hence, my aim in writing this book was to put down a strategy which has not only worked for me but also for many of my clients. This way all Australians can at least get some insight into a successful wealth making property formula – one that is reproducible and has stood the test of time.

Since my book was first published almost 4 years ago I’ve been amazed at how many people have come up to me as I conduct seminars around Australia, and specifically thank me for the information they have learned from this book and how it has given them a clear path to their own financial freedom.

The highlight of many of my business days is when I receive emails from people I’ve never met telling they have read this book and it takes pride of place on their bookshelf. They tell me that now they ‘get it’ – how it all makes sense now that I’ve outlined a financial blueprint for them. Remember…all the strategies in this book have been proven in real life. They actually work. They are not some theory a property ‘guru’ preaches but does not practice.

Both my wife Pam and I remain active property investors and developers and we use exactly the same techniques I will teach you to grow our already substantial property portfolio.

But back to this updated third edition…

As I write this new edition in September 2009 we are living in interesting times. A time of massive opportunity as we work our way out of the Global Financial Crisis and move into a new property cycle.

Seemingly out of the blue, and due to events that started on the other side of the world, we have been hit by the most serious global recession in almost a century, which has placed our financial systems in turmoil and left the entire world facing an unprecedented economic crisis.

The good news however, is the same events that have made many feel uncertain about their financial future will produce some of the best opportunities to realise your own financial independence that you will experience in your lifetime.

This is the beginning of a new cycle – a new opportunity for you to build YOUR wealth.

What we are seeing now has many of the hallmarks of one of the great wealth building opportunities that come around every so often. These are the times when fortunes can be made for those who are prepared and are “in the game”. They are also times when those who are not “in the know” will make the same errors that others have made in the past that will hold them back financially.

Yes, times like these are make or break times. And the key to “making it” is setting yourself up well so you can take action when the time is right.

This is not just another circuit of the economic clock, it’s a situation that many people have never experienced in their lifetime… and possibly a situation we may never experience again for a long, long time!

This is an opportunity to get set to take advantage of the beginning of a new property cycle that only occurs 2 or 3 times in your adult lifetime.

While there will be some great opportunities the rules are different now. We are moving into a new financial era – a time of change. Let’s be honest: most of us don’t like change – we’d rather have a nice predictable environment for our job security, our businesses and our investments. Unfortunately, all these are subject to the whims of the markets and the economy, and therefore are not predictable.

I felt compelled to update this book when I realised how much the property markets have moved in the couple of years since I penned the original edition. So in this edition I clarify some strategies, expand on others and in fact complete change my opinion on one or two.

As I write this new edition of what has become Australia’s property investment classic, the world is coming out of recession but some countries are still suffering more than others.Fortunately the Australian economy has not fared as badly as that of many other nations, but companies are going broke, people are losing their jobs and most of us are feeling at least a little uncertain. But eventually our economy (and that of the rest of the world) will turn around and the good times will return. And when that happens the world economy will once again inflate, which means prices will start going up again. As the world comes out of the almighty recession we have been experiencing there will probably be a period of inflation and life will become very difficult for the average Australian.

The US government printed billions and billions of dollars to salvage their economy. So did many other countries. When a government turns on the printing presses and floods the markets with more dollars this eventually decreases the value of every dollar – the ones in your pocket and mine as well. When your dollar buys less and less and the cost of everything you buy goes up, this is called inflation. This is good for the government who eventually pays back its debts in cheaper dollars, but it’s not good for the average person.

Now this is a simplistic explanation, but many economists concur that inflation will come back in a big way. Give it a while and not only will petrol prices rise again, so will the cost of food and most other things you buy. Yes, we’ll have another round of inflation, but it doesn’t have to be bad news for you if you own the right type of assets – those that increase in value during inflationary periods – such as residential property.

Inflation rewards borrowers who acquire appreciating assets using depreciating dollars, but disadvantages savers as the value of their money goes down over time. This will set the stage for another significant property boom as more investors will turn back to assets that store value, like residential property, which increases in value during inflationary times).

Currently many Australians have taken their money out of the share market and have put it “safely” in the bank waiting to se how things pan out. Eventually they will need to re invest their money as they realise that they are losing money getting a 4% or 5% return in the bank and then have to pay tax on their interest payments.

When looking to invest there will be a flight to quality – to an investment vehicle that is safe and secure. Many investors will remember how the value of their shares plummeted and they will invest in residential property again and this will ensure that the property cycle moves on. Just like every boom paved the way for the next downturn, every bust sets the stage for the next property boom.

As our markets move through the next property cycle and properties in Australia increase in value by millions of dollars, the properties themselves won’t care who owns them. So you should be one of these owners. Somebody is going to make money – it should be you, and in this book I’m giving you the knowledge to do that.

The game of property investment is a little like the game of chess – we all have the same pieces on the board. But those players who can see 3 or 4 steps ahead are the ones that are going to win.

While the majority of people will sit on the sidelines feeling sorry for themselves, successful investors are looking for and buying investment opportunities created by our changing times. That’s right some people will thrive, not just survive in these difficult times. While this may seem difficult to believe given the amount of negative news bombarding us on a daily basis, the truth is fortunes are always made in times of change.

The challenge is this: history tells us that some properties are going to increase in value three or four times more than others, so it’s important to know which ones will be in strong demand.

As your property mentor I will take you through the strategies that you will need to understand to build your own multi million dollar property portfolio – one property at a time. And don’t worry it will be easier than you think as you ride the wave of the next property cycle which promises to end in the biggest property boom in Australia’s history.

Why do I say that?

I’m glad you asked. Read on to find out…