In our modern-day world of investing, property stands as a tried and true asset class, especially in New Zealand.
The financial landscape continually evolves with online investing apps and content to consume that’ll bring you pretty close to ‘educated enough’ to give things ago and get some okay results. An increase to information and democratising of investment options, would always result in more people playing the game. This happens with property to, albeit at a slower pace.
Times are changing though, and no more than ever, we need to be strategic if we’re asking ourselves the question: ‘How we invest in property ‘?
In this article, we’ll delve into the strategic brilliance of property investing through a unique lens—the Property Quadrants—providing insight into how this nuanced method can redefine your financial future by showing you, there’s more than one way to get a rate of return out of property.
The property market has historically allowed many people to play completely different games and still achieve a favorable result. You could target cashflow positive properties, capital gains properties, development opportunities or even engage in the odd flip. It’s within this complex landscape that the Property Quadrants shine. If you don’t know where to start but you’re willing to throw away all you know, then here’s a systematic framework designed to master the property game. Inspired by Robert Kiyosaki’s revolutionary concept in his book “Rich Dad’s Cashflow Quadrant”, the Property Quadrants by Nichole Lewis provides a lens to interpret the interplay between varying ‘spaces’ or quadrants within property investment.
It’s important to note property investment is not a one-size-fits-all venture. Our hunger for wealth, sensitivity to risk, and starting point, will ultimately lead us into varied routes to wealth creation.
This complexity is what the Property Quadrants encapsulate: four distinct ways to engage with property, each offering different risk-reward profiles, and suiting different lifestyles.
In the wake of the Global Financial Crisis and especially in the US, countless property investors had to rebuild their financial stability, and many of them chose to jump straight back on the horse they fell off of (hopefully now though with a lot more ‘street smarts’).
After you’ve gone through a few setbacks, and I supposed this works in many part of our lives, we learn not to jump head first into property without a well-defined strategy. Maybe the strategy is to purchase three rental properties, pay down half the debt required to purchase them over 20 years, then sell one to repay the rest. You’re debt free in your own home with a little bit of property income (rent) to supplement your life. It doesn’t have to be technically perfect, but there should be a strategy. A trusted coach or mentor specifically for property, such as Nichole Lewis, who not only understands the Property Quadrants but has navigated them successfully herself, can be invaluable. Like a savvy midwife guiding you through the birthing process, a property coach can lead you through the often tumultuous journey of getting started here, ensuring you stay on course towards prosperity.
Property can be a transformative catalyst for adopting a positive mindset and improving lifestyle. It’s true – if you approach this like a marathon runner approaches their training, you’ve got this. Property differs from other investment forms in this way – the more you put in, the more you get out. You don’t just own a share of a company or a piece of paper; you own a tangible asset, a home for people to live in, while you grow a financial return – what could be better?
Well to be honest, there’s a case to be made for developing a diversified strategy that includes property, rather than just majoring on one side dish really well. But like any aspect of your portfolio, be an extremist with it if you can. I think that can make you a better investor.
Property investment isn’t a magic bullet for easy wealth creation, but if you’re working to a strategy, you’re far less likely to succumb to the same dumb mistakes we all make when getting started for the first time. With the guidance of a mentor, a robust strategy, and a positive mindset, you can transform property investment from a mere venture into a rewarding lifestyle. The key to unlocking this potential lies in the ability to view property not merely as a singular asset class, but as a dynamic platform that enables diverse paths to financial prosperity.
Nichole Lewis is the author of the Property Quadrants, and I interviewed her recently on the Everyday Investor Podcast.