Aaron is a 38 year old, long time property investor, and is currently joint owner/manager of one of the country’s largest Mortgage Choice franchise operations.
The team at Pumped On Property have asked Aaron 5 questions to better understand his approach to lending and personal property investment:
1. When and why did you become a mortgage broker?
After buying my first investment property at the age of 18 I was quickly looking to purchase more, this led to a situation of ‘running around’ banks to source finance, this became very time consuming. Every lender has different policy’s, and will lend for different situations, it takes a lot of time to find this out on your own. When a property of 14 units came up for sale, and I was unable to find a bank to finance the purchase, this led me to seek the services of a mortgage broker. My broker at the time was able to structure the finance to purchase the units, and save me thousands on interest in the process. The result was holding these units for a few years with a capital gain of around $1 mil, something that I would not have achieved without the help of a mortgage broker. This led me to taking an interest in this line of work, and eventually pursuing it as an occupation in 2007
What are 5 important things you wish you knew sooner about investing and lending?
- Draw from others experience and mistakes. Like any top sports player needs a good support team, find qualified people who have an understanding of what you are trying to achieve. Ask yourself, is my accountant/mortgage broker/property manager/etc a property investor? Does my team of experts ‘walk the walk’ or do they just ‘talk the talk’?
- Listen to all advice, but be wary of where it is coming from. Everyone is an ‘expert’ at the back yard BBQ!
- Seek advice from your accountant and solicitor, with regard to structure before signing the contract. Are you buying in personal name/trust/joint names/etc?
- Think carefully before buying into a joint venture. Whilst this has worked for me in the past with great outcomes, it can seriously hinder your future lending potential.
- Carefully consider the fixed v’s variable loan structure. What is right for one person may not be right for you. Fixed loans can give great security and budgeting advantages, but can also have many restrictions.
What is your personal property investment strategy?
Buy and hold, long term investments. In the past I turned over a few properties over a 3 to 5 years period which helped me pay off my PPR. In hindsight I should have held them. These days I now focus on holding properties, improving the condition and increasing rental returns. The improvements also help to increase the value, thus increasing equity that can be used to assist future property purchases.
What is the most important thing you have learnt from your experiences in property investing to date?
Take emotion out of it! This is a business decision with the goal of increasing wealth. You’re not going to live in the property yourself, so don’t buy for yourself. Remember that the typical tenant will often want a very low upkeep, minimal maintenance property. The most successful properties I have owned, have been properties I would never even consider living in myself. The other important aspect is patience; expect the first 5 – 10 years to be slow going. Wealth creates wealth, so things can snowball as time goes on!
If you were starting again what would you do differently?
I would place just as much focus on finding the right ‘support team’ as I would on finding the first property to buy. If you can find your ‘team of professionals’ early, it can save a lot of hassle down the track.
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The information provided in this article is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances.