The Trinity Strategy can provide property investors with a definite pathway to achieve their goals and an approach to overcoming challenges.
For KnowHow’s Bushy Martin, a list of goals, tactics and budgets isn’t enough to achieve success in property investing. It instead requires a sound strategy which addresses these factors, allows investors to define their why, how and where, and make critical decisions when tackling challenges.
On the Get Invested podcast, he delved into the importance of The Trinity Strategy, which is defined by three parts – Lifestyle, Finance, and Property.
The purpose of The Trinity Strategy
Bushy explained that The Trinity Strategy acts as a compass for investors throughout their journey.
“What we’re really trying to do is make sure that we get crystal here on something that motivates us. But it’s also a compass, in the context that it then starts to dictate the decisions we make day to day, and determines if you’re making a decision that is going to take you closer to where you want to get, or if it’s going to take you further away. So it builds in that sort of GPS. Once we’re clear on those things and that lifestyle, as part of that GPS we then check back in on what’s changed in our life, what’s changed in our portfolio, do we need to restructure the finances, and what does that mean,” Bushy said.
The Trinity Strategy part one: Lifestyle
The first stage is to get really clear on what your lifestyle strategy and goals are, which will help you get clear on what you want and need to do.
“The lifestyle is ultimately where you see yourself perhaps in retirement or how long you want to be working for a job versus the job working for you, and that lifestyle is where you picture yourself in five years, 10 years, 20 years, 30 years, whatever it is. Now I think a lot of people maybe look at that and they maybe look at the short-term goal within five years and they forget about the rest, because they think the rest is just going to follow on. So I think it’s very important just to help people understand that lifestyle is ultimately where you are at those stages through your life,” Bushy said.
“Now what I see a lot of people doing is you ask them, why are you investing in property? And I generally get the following answers: I want to make more money, I want to save some tax, I want to retire a bit earlier and a bit more comfortably, I want to secure my family’s future, or I want to get 10 properties in 10 years. For me, all of those answers are just a dream wish list. We need to define it in real terms – the why, the what, the who, the when, and the how, and that’s going to then drive the type of approach you need.
“So the key elements there are really to spend some time contemplating what’s your why. What really turns the lights on for you and what do you get really excited about. That needs to be underpinned by getting really clear on what your values are, because a lot of people don’t even know what their own values are, and if you don’t do things in accordance with your values, you’ll shipwreck yourself without knowing it. Then these will all inform what your life vision needs to look like.”
The Trinity Strategy part two: Finance
Once you’ve established your lifestyle strategy, the next step is to overlay it with the finance strategy, which ultimately determines your capacity.
“The finance strategy is all about what can you do, because there’s often a gap between what you want to do and what you need to do and what you can do. Property is definitely a game of finance, and the finance is really important not only with cost, which is what most people focus on, but it also has a massive impact on capacity and risk. If you don’t structure things well, and you don’t access the right finance solution strategy and structure it to suit you, you can be putting yourself out of thousands of dollars a year and hundreds of thousands in wealth down the track,” Bushy said.
“So what I normally say to people is, well let’s apply the bare facts to your position. In terms of looking at your finance, there’s a whole bunch of things that you really need to be aware of right up front. I see way too many investors who are cross securitized, in that they’ve got all their lending with one bank, and what they don’t realize is that this is really upping the risk, minimizing their flexibility capacity and also reducing what they can do on property by putting all their cards in the hands of the one lender. It’s handcuffing you and limiting you and putting yourself in the situation where if things go wrong, the bank can come and take the keys to everything. So the biggest asset you have as an investor is your buying capacity, not the rate.
“Also, work with a lender who has realistic valuers and not conservative pessimistic valuers because they can dud you out of a lot of equity, and that can also reduce your purchase price power. So make sure you do that, and then adopt a multi-lender structure where each property and each loan is independent of every other property and every other loan. This way, you control what’s happening with your properties and you do what you want, when you want, and not allow the banks to control that process to minimize their risk.”
The Trinity Strategy part three: Property
A combination of the lifestyle and finance strategy will then drive and direct your property strategy.
“The property strategy complements those two strategies to achieve them within the capacity constraints you have, and that will start to dictate what type of property, what type of location, and what sort of ownership structure is going to assist you to get there. And it’s not fixed either, so where you start with your properties is going to evolve and change as you head closer towards that end destination,” Bushy said.
Listen to the full interview here.
Want to Know How you can build wealth and optimise your property finance with the help of leading, qualified experts? Check us out and talk to the team, now.
