Henry Fonda, the actor, is reputed to have said that a good thoroughbred horse never looks at the other horses, he simply focuses on the track ahead.
Quoting this piece of homespun philosophy, Jason Lee, National Manager of Rawson Properties’ new commercial division (which has established 20 franchises in 11 months), says that much the same approach is essential to successful property investment.
Lee is an attorney who has had 12 years property experience and has written two top selling books on property investment. Throughout his career, he said recently, he has found that a competitive (sometimes indeed almost envious) spirit has tended to motivate some investors and to lead them to over-extend themselves. He recalls conducting a seminar in 2005 where a participant boasted that he had acquired 40 properties in a remarkably short space of time. Three years later that same investor was consulting Lee on how to achieve quick sales so as to avoid foreclosure by the banks.
“It is,” said Lee, “absolutely fatal to compare one’s performance in property with that of any other person or to be in any way influenced by them into taking a competitive stance. An attitude of this kind leads only too easily to buying for quantity rather than for quality’s sake. The truth, of course, is that a good deal is a good deal under almost all conditions, whereas a bad deal will need a miracle to make it a good investment. Buying should always, therefore, be done carefully – and never for the sake of simply increasing one’s portfolio.”
Lee drew attention to talks given on several occasions by Bill Rawson, Chairman of the Rawson Property Group, in which he has always recommended that investors should, initially at least, buy just one property per annum – and Rawson has always said he will usually inspect 15 to 20 properties to achieve one buy.
His own investments, said Lee, have always been done on much the same lines, with this corollary: he tends to hold onto one buy for long term goals such as achieving rental income and capital appreciation, while every second buy will usually be sold quickly to generate a profit which can be used to reduce his gearing on other investments and thereby improve his cash flow, or to purchase a better proposition.
“So far,” said Lee, “I have always found that this approach is capable of producing inflation beating investments – as well as a cash flow positive property portfolio.”
Investment in all kinds of property, but particularly commercial property, said Lee, is very definitely on the increase at the moment because returns are better than those on the money markets. His 20 franchisees, he said, are therefore having a very active year.
