What works?

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I have recently been looking at a business that is according to one of my associates “The greatest invention in New Zealand’s history”.

There is no doubt that it is absolutely unique and could potentially save companies billions of dollars in 1 particular global industry.

The interesting part from a business point of view is that even though this product is amazing, there is no guarantee that it can be successfully brought to market and become the world leader it should.

So to me it’s quite fascinating that quality is no guarantee of success. Having the greatest thing since sliced bread is NOT a guarantee of fame and fortune.

This particular business will require enormous amounts of money, cutting edge IT development and very sophisticated high level marketing strategies. So I have to assume the best and plan for the worst, even though the upside is enormous.

In other words having a great idea or product makes no difference to the fundamentals of business.

Property investing is exactly the same of course. We all look for the super strategy that will make us a zillion dollars in one hit,
and I am all for that.

HOWEVER the reality is that we will have a lot of deals that are marginal, some deals will go wrong etc. So we must treat PI as a business like any other. Hope to make a fortune, but assume that things will go wrong 50% of the time and PLAN to make a modest profit, then the big upside is a bonus rather than something you are entirely relying on.

It has been easy in a good market to take big risks, (and the balance is hard to find), but I help too many people who bet the entire farm on their first deal and when it didn’t go exceptionally well they are in deep bovine eschatology.

So now we are in a prolonged weird market you must ensure you keep your brain engaged and take manageable, calculated risks that won’t bury you. I am helping people get into some good quality property in great areas with good yields. They can sleep at night, they are not overly geared and they have minimised their risk and maximised their potential income/equity growth by being in good rental demand locations in Auckland.

Whilst there is definitely a place for niche market stock like rent by the room and flats etc., they are NICHE markets, only for experienced investors and should never be more than 10% of your portfolio.

So like I say everyday STAY SAFE

Dean Letfus @ www.MassiveAction.co.nz