Property investor and CEO of Open Wealth Creation Cam McLellan talks hotspots, common mistakes investors make and why he doesn’t mind if his kids go to Nepal and milk cats
In your book, My 4 Year Old, The Property Investor, you explain the 10 biggest mistakes by property investors; which one do you think is the most common?
One of the most common would have to be selling to realise profit – a redraw facility should be established instead. Property investing is like any other profession, it is a skill that can be learnt. The difference between an investor and a smart investor is that the latter looks to eliminate risk. To become a smart investor, I would say there would be 20-odd areas or topics that you need to become competent in. These competencies avoid making mistakes. Some of these include setting up your team, taxation law, banking proposals, identifying the investment, finance structure, pricing cycles and developer’s activity, contracts, etc. You must follow a process that delivers you a measured outcome. Not many people will talk about risk when it comes to property investing. But people can’t afford to make $500,000 mistakes. Remember, we’re not talking about buying lollipops.
Do you think it’s important for parents to teach their children the opportunities of property investing from a young age?
Remember the three generation rule. The first generation creates it. That’s me. The next generation builds on it. That’s my kids. Then the third generation blows the lot. My plan has been to document in great detail my investment strategy so that any future generation can pick up my investment manual and learn the profession of investing. They will then have the knowledge and the tools to do it themselves. Once you understand the basics of investing and have a low risk investing plan in place it’s actually pretty boring. As a parent I know that kids don’t like boring so I believe it’s my role to teach them the fundamentals of investing so that they stay safe as investors. That way they can ‘be’ anything they want in life. Hey, I don’t care if they want to go to Nepal and milk cats. Whatever makes them happy is fine with me. But one thing I will be sure of is that my kids will be very savvy investors armed with investment knowledge that is far beyond their years.
What’s the best piece of advice you have ever received about investing?
My first property mentor was an old grey haired boy named Steve. Steve still sits on the board of one of my companies. I asked him the best time to buy property. His answer was 20 years ago. The next best time is as soon as you can afford a deposit. My all-time favourite investment rule is: land appreciates and buildings depreciate.
If you could start your property investment journey all over again is there anything you would do differently?
You can’t put an old head on young shoulders. In reality, with my investment journey I was lucky. A good mate of mine’s dad was a successful investor and he taught me the basics. He stepped me through the minefield and saved me from many certain mistakes while Felicity and I built our initial portfolio. I was earning $22,000 a year back then. Without his help there is no way I would have come out the other side unscathed. There is just too much to learn.
Who has been your greatest inspiration as a property investor and why?
One of my business partners Al Lewison would have to be my biggest inspiration. Al’s now been involved with over a billion dollars of property acquisitions so he knows his stuff. Besides our own portfolios, we’ve built serious commercial and residential portfolios together.
Throughout your property investment journey, have you had many bad tenant experiences?
No, tenants have all been good. If you buy in the right areas, tenants are the least of your worries as an investor. In saying that, I have had plenty of bad property managers.
This feature is from Your Investment Property's August Issue. To read more, you may purchase the issue or sign up for a subscription.
