Funnily enough, you don’t have to be a parent to be in the Mum and Dad investor club! If you’ve heard the term before but you’re not sure what it is, let me explain: the definition of a Mum and Dad investor is a “small scale, non-professional investor”.
Small scale? Non-professional? Well, who wants to be one of those?
If you’ve been labelled a Mum and Dad investor before, or you suspect you fall into that category (don’t feel bad – most Australian investors do!), there’s a big incentive to escape the club.
Commonly, this group of investors don’t move past their first investment, or they sell up within the first two years.
So yes, we definitely want you to move into the realm of big-time, professional investor!
Here are three ways you can spring out of the Mum and Dad club and join the big league – which is where the real success happens.
- Change your mindset from small-time to big-time.
It’s so easy to think of yourself as a regular Joe, just dabbling in property as a sideline money-making strategy. But building up a portfolio that will set you up nicely for retirement will take more than just dabbling; it means making investment as much a priority as getting up for work each morning.
If you stop thinking of yourself as a Mum and Dad investor and start thinking like a professional, then that’s when you’ll steer towards your goals. Suddenly having a portfolio of 14 properties doesn’t seem crazy, and retiring 10 years earlier than you expected becomes an exciting possibility.
It all starts in your mind. Set bigger goals for yourself. Aim a little higher. Be radical in the way you approach real estate as your means to wealth. It’s a powerful weapon: wield it like the hammer of Thor!
If you can fill your mind with bigger dreams and set new and elevated targets, your confidence can’t help but grow. And that’s what you need to become a professional investor – just the confidence to believe that you are.
- Diversify your portfolio
Houses and units will always have a home in your portfolio. But have you thought about looking even further afield at other means of property capital? What about buying into development deals, or homes that can have a granny flat constructed out the back? If the numbers line up, having a variety of housing types under your belt can work in your favour when markets shift – as they always will.
Talk to other investors to find out which niche markets are successful for others. You might be surprised by the types of property ventures that can generate excellent yield or potential for quick profit. Sure, they might have a little more risk attached, or require some extra work, but if you do your due diligence you could find a hidden treasure to bolster your portfolio.
I’ll also add that professional investors don’t do it on their own – they still use the services of financial planners and mortgage brokers. Having an expert on your team can help you overcome any nerves or fears you might have about branching out, and steer you in the right direction.
- Fix what you already have
Step beyond the ‘set-and-forget’ mentality of your average Mum and Dad investor. Review your current properties with an eye for spying potential profit tucked away in the details.
For example, do you have a property that hasn’t changed in rental value for a year or two? Make a call to your property manager and have them review the current market rent. It might be worth an extra $10 – $30 a week, perhaps even more.
Could some minor renovations increase the value of a property to justify a rental increase? Could revamping the kitchens and bathrooms even improve a property to the point where you could sell it for a tidy profit and use the funds for another investment, or to pay off your own mortgage?
Don’t let anyone tell you that you can’t reach every single goal you’ve set for yourself just because you’re not a real estate professional who works in the field. Moving on from the Mum and Dad investor stigma means thinking and acting like you’re the real deal. And if you have your plan and the goals are high but achievable, then you already are!