The 7 C’s of Active Property Investing
At Active Invest a very important aspect to wealth creation is reducing debt and building equity and wealth over time. Any successful Active Property Investment outcome relies heavily on the integration and are dependent on each of the 7 C’s.
Many clients we speak with simply require just a little direction, some simple inspiration and good old-fashioned mentoring, after which they do the rest and bingo, they can see their wealth building with each project they complete.
Active Invest, through their advisers, have helped hundreds of clients implement strategies to build wealth and deploy equity thus providing you with more choices for ongoing wealth creation activities.
Why do we have the seven C’s?
The Seven C’s of a successful “Active” Property Investing outcome.
Most people understand the 3 most common aspects of the Active Property Investing strategy…. they are:
Consider the 3 above, Concept, Construction and Completion, looks simple hey! Concept and how does the project look? what internal configuration and external features are required and desired to suit the exit strategy of the client. What design will comply with the planning scheme associated with the specific site? What design will maximise the highest and best use of the site? Construction, what method is being used for framing, steel elements, concrete slab design, screw piles, soil reports drainage and the list goes on. Then the important Completion activities, clean-ups, landscaping, finishing touches to the project so it can be moved to the next step in the client’s strategy.
- 2. 3.
Although these 3 are important we cannot forget to consider the other 4 critical items, all hidden, noting nothing is visual about them but crucially, a successful Active property investment project will not eventuate without them, those being:
Capacity is all about the ability of the client to be able to fund the project. Funding takes in several forms, cash or equity and cash-flow. Do you have the necessary cash to pay for consultants, deposit capital, buffer working capital and in building terms, the bank will want you to invest a minimum amount of your own capital? Cash-flow is an important consideration to determine your capacity to fund the interest and debt payments now and into the future. During client strategy sessions we determine your capacity.
Collateral focuses on the security you will utilise to assist you with funding submissions to prospective lending partners. Collateral can be cash, other property or savings like capacity. Funding partners will require you to commit to offering minimum levels of collateral. Now you can use other people’s money in some circumstances for sure and alternative strategies exist however for most investors this is a great start to understand the basic requirements.
Active Property Investing outcomes is all about improving your financial well-being to a level higher than when you started the project. Before you commit to a project you must understand whether the project is Commercial. No site should be purchased, no project should be committed to without first proving beyond doubt there is money to be made. Money to be made based on all the input assumptions to the project feasibility. What items make up the feasibility of the project, the potential site purchase price, acquisition duties and taxes, consultants’ cost for advice, interest holding costs, infrastructure costs of utilities, gas electricity and water, council or local government contribution fees, building costs and never forget the important contingency factor. To truly understand the commerciality of your project feasibility must include all sorts of sensitised numbers. What happens if the build price increases, selling prices decrease, market changes, regulators policy changes. All these will have a bearing and impact of the outcome of your project. To understand the Commercial nature of your project is crucial.
For an Active Property Investor to be successful, they need to have the ambition, patience and most importantly Courage to learn new skills, courage to take control of your future, courage to take calculated, measured risks and courage to make long term financial decisions for you or your family of whom will benefit. They also need more knowledge than they may think – there’s things they already know, things they know they don’t know, but as soon as you get into your first project, you’ll also stumble on lot’s you didn’t even know you didn’t know! As an Active Property Investor, you’re an investor committing your time, expertise and talents to convert land from its current use to a higher and better use. So, you’ll need to educate yourself on property, the markets, economics, finance, town planning, the construction processes and the marketing of real estate projects.
Some of this you can learn by doing your homework and other lessons you’ll learn along the way. In order to be successful, you need to start small and work your way up. Many of your mistakes will be made with your first few projects so it is important to start small, so you don’t ruin your property investment career before it has even begun. Several f not all mistakes could be avoided by partnering with qualified property investment advisers like Active Invest
Property Investing is all about capturing opportunity. One definition of Active property Investing is “the continual improvement of the built environment to meet society’s future requirments. To succeed as an “Active” property investor you must make decisions and act and implement the strategy.
Property Investment Strategies
Property investment can be deployed via in 2 sub strategies:
Deploying this strategy, we rely solely on the property to increase in value over time. In this situation you are reliant on the market continuing to do the heavy lifting and increase year on year without fail. Problem with relying on this strategy alone is that the property market will cycle through periods of lesser capital growth therefore we cannot rely of high single figure or even double-digit growth. The market will simply not deliver growth for ever. A normal property market will deliver periods of high growth, low growth, no growth and negative growth, this is normal.Relying on the market to improve to get gains, that’s an old strategy from five to 10 years ago – it doesn’t work like that anymore. You need to use a more creative approach to make sure you’re creating instant equity and starting off on the right foot from the very beginning.” That’s where the active approach comes into play.
This is where we consciously purchase a property that can be improved in value (Property Price Rise). We are not considering or waiting for the price to passively rise, we are going to make the value increase in our control, NOT the market controlling us. When you can find a property that presents problems and opportunities and you have the solution, you WILL make money. The active approach can take shape in numerous outcomes and forms, some being:
- Land Subdivisions
- Development Infill
- Development Knockdown rebuild multiple
Relying on the market to improve to get gains, that’s an old strategy from five to 10 years ago – it doesn’t work like that anymore. You need to use a more creative approach to make sure you’re creating instant equity and starting off on the right foot from the very beginning.”
Recent case studies we published detail active sites currently displaying all or some of the strategies listed above. Some sites are readily visible via the internet to show before and after results, they include:
- 38 Cannes Avenue Bonbeach- Knockdown 3 Lot Subdivision
- 29 Kalimna Street Carrum- Infill and renovation 2 Lot Subdivision
- 66 Centenary Street Seaford- Knock down 3 Lot Subdivision
- 24 Mount View Street Aspendale- Infill and renovation 2 Lot Subdivision
Numerous other sites are at differing stages of the process including acquisition, council planning, demolition and building tendering etc. The active approach does not necessarily require us to improve immediately, you can combine the passive approach but making sure the property you buy will deliver an Active outcome to accelerate the equity growth.
When buying a site, we recommend you buy a property that can deliver the active outcome when it suits you financially.
During client finance strategy sessions, we discuss these aspects in detail, because our job is to help you build investment wealth in a smart, sustainably affordable manner as quickly as possible, so you can redeploy equity to build wealth over time.
Our main goal at Active Invest is help you build wealth. The fist step is to understand how you can use your equity to achieve this very important milestone.
So many of our clients are enjoying the benefits of Active Investment Strategies. For information and a free no obligation discussion contacts us:
Happy Investing !