Property guru Steve McKnight's tips to making a good investment
Respected property investor and author Steve McKnight will be speaking on some of the best property investment strategies at PRISM 2015. We have a small sneak peek.
Following its huge success in the past two years, Property Investment Summit Malaysia (PRISM) is now making a third comeback at Sunway Pyramid Convention Centre this 14 - 15 November.
Over 5 panel discussions and property talks, participants are assured to gain first-hand perspectives on various legal and financial issues in the property industry such as market sentiment and the dynamics of the economy at large.
The event will be graced by 32 experts and industry players, among them Steve McKnight who is regarded as one of Australia's foremost property experts. As a highly acclaimed speaker, his wisdom and resource have proven to benefit and inspire many in achieving their financial dream.
We got him to share a few tips ahead of the talk.
How did you get started in the property investment industry?
My knowledge of real estate began by growing up watching my father make some interesting commercial and residential investments in the late 1980's. It wasn't until 1999 that I acquired my first investment property – a 3-bedroom, 1-bathroom ex-government rental house in Ballarat (a regional city an hour's drive from Melbourne) acquired for the princely sum of $44,000.
What is something you personally look out for when preparing to purchase a property?
Unsophisticated speculators buy emotionally and hope for high returns. Smart investors buy because they can see profit by exploiting inefficiencies. For this reason, and above all else, when buying property I seek to understand 'the value proposition' (TVP) – both on purchase and also on expected sale or exit.
Do you have any property horror tatler_tatler_stories?
Oh yes! You don't buy hundreds of properties without seeing things that would upset even the hardest stomach. From crucified cats, the chalk outlines of bodies, fluffy handcuffs, to severe cockroach infestations and, of course, enough terrible tenant tatler_tatler_stories to fill several books.
A line in your profile caught my eyes. It says: “the biggest and most common mistake investors repeatedly make is trying to buy, rather than make, their property profits”. What is the best way to add value to one’s property?
First of all every investor needs to appreciate that value is in the eye of the beholder. All too often investors make improvements according to their own tastes, forgetting that it is the user, not the owner, who counts most. Remembering that you should never own an investment property you plan to live in yourself (to save over capitalising and getting overly emotional), the smart approach is to find cost effective ways to make the property more desirable or appealing for the appropriate target market renter or next purchaser. This may be cosmetic – such as colour choice and styling, or it could be structural, such as converting a living area to a bedroom, or something more substantial.
What should investors do to ensure that they do not make bad property decisions?
We all need filters that prevent us from acting on our ideas without first understanding and testing their validity. In real estate these filters are called due diligence. They are the questions, background checks, assessments and third party reports we require to gather evidence that our idea is a good one and not a disaster in disguise.
On the whole, where do you think the property market is headed in the coming year?
Property markets ebb and flow but it's always a great time to buy a great property. Here's a tip: screen out the noise of opinions and headlines and focus on executing your investment strategy.
McKnight will be delivering at least two keynote sessions at PRISM 2015 this weekend, drawing from his extensive experience to provide proven, profitable and practical investing tips and techniques to make more money, sooner. For more information, visit www.prism.my
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