Here are 3 Questions to help you Discover …
Your “Core Area of Focus”
IF YOU HAVE BEEN a Residential investor up until now, you would have found your selection process relatively easy. Most likely, you simply chose between a small house and an apartment — maybe even a block of flats.
However, with Commercial property, it has no doubt been the seemingly endless choice that has confused you.
Anyway, let me assure you, it’s not that difficult. You just need to know the right questions to ask.
Question #1: What’s Possible?
With Commercial property you get to choose between shops, offices, warehouses and showrooms — or sometimes, various combinations of these.
Plus, you can purchase them as a stand-alone property; or by way of a strata-title.
So at this point, and you’re right … your choice does appear rather daunting. Therefore, you need to ask …
Question #2: What’s Appropriate?
Here is where you discover what type of investor you really are.
For example: Everyone talks about negative gearing — so let’s explore how comfortable you are with borrowing.
For some people, borrowing 80% of the property’s value is just fine. But you might feel that anything over 50% would cause you to lose sleep.
So you’ll need to discover exactly what your ‘Threshold of Insomnia’ is — to gain a clearer picture of the size and type of properties to look for.
Make sure you don’t cling blindly to your past behaviours, where you feel most comfortable. Instead, by asking the question about what’s appropriate, you start to narrow down your options to something more manageable.
From there, you need to ask …
Question #3: What are you Capable of?
This is where you take a look at your available resources — being both Money and Time. But make sure you don’t confine that to what you alone might have.
If you’re a little low on available equity, you may think about joining with other investors — in a partnership or a private syndicate — to leverage your equity and spread your risk.
But assuming you plan to invest on your own, then you need to properly assess your available equity. And that will include your ready cash, as well as any equity you might have available in other properties you own.
Therefore, having gone through this simple process, let’s see how you might depict this in the diagram below.
After applying these three ‘filters’, you’ll notice you’re left (at the centre of the three overlapping circles) with … what’s possible, what’s appropriate and what you’re capable of investing in.
And here’s the thing:
Contrary to popular opinion … the smaller your list of potential opportunities, the clearer and more successful your investment strategy is likely to be.
The process is really quite simple. However, it is one even seasoned investors undertake periodically — to ensure they stay on track, with their Core Area of Focus.