Evolutionary Investing

There a really cool graphic called “The evolution of man” that I want you to recall. It’s the one which tracks our species progressive elevation from slack-shouldered apes to majestically-upright homo sapiens.

I’ve often seen this picture and thought about how this Darwinian theory really does apply to all sorts of life’s element… including investing.

I thought it was time somebody told the story about the evolution of the investor – with their tongue placed firmly in their cheek – why not me?

By the way – to enjoy the full force of what I’m offering, you really should read this blog with David Attenborough’s voice narrating in your head…

 

And so, it begins…

First time investors have similar needs. They’re eager and engaged – even playful – quick to learn and keen to become part of the pack.

First timers are generally inexperienced and will require both guidance and understanding from more seasoned members of their community.

For the first timer, simple initial steps into the property jungle are necessary.

These novices often need to watch their finance position, and require an opportunity to establish their credentials as a reliable borrower before they can move up the pecking order.

Property-wise, it should be nothing too complex. A well-located unit or house with a solid potential renter base and above average yield is their best environment – with great long-term upside in value an absolute must.

Rental returns should be strong to allow some income buffer straight away. In addition, a holding with some opportunity to improve value through renovation or future small development is always handy.

 

Emerging from the trees

As they graduate beyond this initial holding, the investor will look to become more adventurous.

Armed with the practical knowledge of how to locate, negotiate, secure and maintain that first investment, the second-property buyer will look to replicate their success. They may choose to stay close to their comfort zone, picking similar properties to the first, but all with a view of doubling or tripling their outcomes.

Their position in the investment lexicon now established, they occupy a thrilling space in the sector where the possibilities seem endless.

 

Straightening up

With a few runs under their belt, the investor will begin to seek more adventure with their holdings and look to acquire bricks and mortar with a bigger potential twist.

These are properties where, with a little imagination, they can make some impressive additional dollars. Expect this more experienced species to seek larger blocks with long-term redevelopment potential, or units in small complexes where the Gross Floor Area is being underutilised.

These more experienced investors have a distinct financial advantage over their often-younger, less experienced counterparts. They have battled for their financial supremacy and, as victors, now have their choice of the most fertile property options.

 

Leading the pack

Given their years spent navigating the nuances and hurdles around basic property investment, the next genome of investor will be keen to get their hands dirty and blaze a path to success that other might follow.

Small development projects will fall within their spectrum as they gain proficiencies in splitter block, speculative home ventures and even unit and townhouse projects.

The savviest and well planned among them will have bought smart in the early part of their investment journey. For these forward-thinking investors, looking back at a well purchased initial holding will reveal a potential development prospect they can now turn to profit.

These kings and queens of the property jungle will also seek new frontiers in finance, often building on an already established symbiotic relationship with a mortgage broker to help guide them past the pitfalls of unearthing development funding.

 

Species Crossover

Perhaps the most exciting stage for any investor is when they break free of their current community and venture even further into the complex but profitable realms that sit beyond the simple residential space.

These investors will look to make their mark, often beginning with a simple industrial shed holding, but also capable of growing toward larger scale office and retail deals if the funds allow.

For some, it’s impossible to say goodbye to the sector that’s served them so well. As such, some find a compromise in advanced residential options and look to acquire a block of flats, or even decide on a joint venture arrangement to try their hand at multi-level unit schemes.

They may even choose to experiment with structure, using funds from their superannuation or family trust structure to maximise their outcomes.

 

Throughout the journey, the investor evolves along with their property portfolio, but always with the long-term in mind.

The best investors help elevate their community as a whole, providing a beacon of success for others to follow.

When you next come across one of these investors in their natural habitat, take time to observe how they make the most of their surroundings. You might learn something useful.

Happy hunting!

Paul “Attenborough” Glossop

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