By investing in knowledge and time, property investors can build confidence in their strategy and approach says Michael Olivieri.
Michael started his property investment journey at the age of 21, growing the value of his portfolio to over $3.5 million over eight years.
The owner of Central Coast Buyers Agent joined KnowHow’s Bushy Martin on Property Hub’s Get Invested podcast to talk about new property investors can confidently begin to create their own wealth.
How to decide the best property investment strategy for you
Michael delved into the process that saw him land on the best strategy for his situation – buy and hold. However, this will be different for each investor depending on their goals and capabilities.
“The first trigger was my father introducing the idea of property to me, and the idea of buying and owning property and collecting rent. And then from there it was really up to me to take that and run with it and just actually learn as much as I could about it. Because you can flip property, you can buy it, renovate and flip it, you can develop it, or you can buy and hold. There’s many different strategies there, so it was important to me to work out what was going to be the best strategy,” Michael said.
“And so I read a lot of books, I attended a lot of seminars, events and conferences around property, and I just tried to take at least one nugget from every single thing that I read or watched or listened to. And the common sort of thing that I picked up was the long term ownership. That is where the real wealth was built. So my strategy was just buy and hold.”
How your property investment strategy can evolve
An investor’s strategy will often evolve over time as their wealth builds, goals change and knowledge expands. For Michael, his ‘buy and hold’ strategy evolved through subdividing and building.
“I purchased that property which was just a modest three bedroom home. But it was on an 800 square metre block, and it was already rented from the start. So I purchased that and worked for about nine months and saved everything I could. And I thought, I’m going to build a granny flat on this property to try and pull some additional income out of it,” Michael said.
“So once I had subdivided that property, that’s what really kicked me off into future properties. I loved the idea of dual income, so I was like, ok, I’m going to find some more of these. So the next one again I just did a cash out from that equity that I produced from the first property, and purchased an existing house and granny flat so it was already done. So I thought, I can either try and find a site and build another granny flat, or I can just buy one done.”
Bushy added: “I think there’s a really important message that comes out of what you’ve done. While the buy and hold exercise is the old Italian way, exercises that you’ve added to that in terms of looking for that redevelopment opportunity and creating the dual incomes with the granny flats, where you’re effectively creating and manufacturing equity, is a really important add on you’ve achieved.”
Gaining confidence by investing in knowledge
While first time investors will undoubtedly harbour some fears, Michael says investing in your own knowledge will ensure you have confidence in your decisions.
“With my first contract, that first property buyer’s remorse kicked in and I was like, oh what have I done? I started doubting myself and questioning do I really know what I’m doing? Have I researched enough? So while I didn’t really have fears about property itself because I felt confident that was a a thing long term, but it was more just doubting myself and still being young and how at 21 everyone else was out partying or going over to Europe and I was signing a contract for a property,” Michael revealed.
“So doing the research and understanding the market that you’re buying in, that really is the key to a successful investment because every market is different. Every suburb and region is different. So knowing the area that you’re buying in, and not just for the property you’re buying today, but the kind of demand that’s going to be there for that property in the future as well. Now, obviously, my approach has always been to hold for as long as possible, but if ever you need to sell it or even if you just want to refinance and redraw some equity out of that property to purchase further investment properties, it’s that demand for that type of property in the area that’s going to drive that value. So knowing what that is, what those drivers are and knowing your area is definitely something that is really important.”
Bushy added: “Investing in your knowledge, that in itself helps to evaporate the fears because the confidence grows as the clarity and the understanding emerges from that. So you’re then going ahead without those hurdles getting in the way”.
Gaining confidence by investing early
There are many reasons experts will encourage investors to begin their journey as soon as possible, but for Michael, it’s about having the space to learn from mistakes.
“When I bought my first property, it wasn’t as scary to do because I felt like if I did make a mistake or if I stuffed up and it went bad, I had time to recover. So I was able to sort of jump in a little bit more aggressively into it and with a little bit more confidence knowing that this isn’t my last show. So that’s really important,” he said.