Building is expensive.
Buildings are expensive.
Everything about building takes time and energy and focus and planning.
If you have ever tried to build something large or tall you understand the importance of good foundations.
If you have ever built a home you will also be aware that the best time to amend the plans is before you have built the building. Things can be changed later but it is more difficult and costs more.
The hardest things to change after the building is complete are the foundations. They are usually under the ground and are busy holding the entire weight of the structure. Altering a foundation is not like changing a window or replacing a roof sheet.
It is no different when it comes to building your wealth, your property portfolio, or your financial freedom.
The best time to make plans, set directions and design foundations, is before you start.
Let me introduce you to our Palazzo De Wealth.
(think big, at one of our events, this would be handed to you on an A3 sheet)
I designed this tool to be a pictorial interface that acts like a mirror staring back at you to show the areas missing or complete in your overall financial structure.
It will guide you and provide written record of your financial life and plans. Ensuring you have everything in order to create good foundations for your property portfolio and financial freedom.
I will run through how it works and why it was built in the shape of a structure.
Looking at the base of the Palazzo De Wealth you can see there are two cornerstones.
These cornerstones are emergency reserve funds.
Emergency reserves for you personally and for your investments.
If you have no investments, then you do not need the investment cornerstone reserve. However it also means that as your investments increase, or the dynamic of your investment portfolio changes, you need to vary the amount in your investment reserve.
We use 90 days cash reserves as a minimum to cover unknown events as the cornerstone emergency backstop.
The rest of the foundation stones cover things like insurances, banking and bank accounts, superannuation, wills, and other key financial considerations that form the basis of your overall financial life.
Once you have the cornerstones in place and the foundation stones laid down, you can then begin to build the pillars.
The Palazzo De Wealth is focused on property portfolios. You can of course slightly modify the pillar names to encompass other styles of investments as well. The pillars of investment style do not necessarily change, only the application, depending on the medium in which you are investing.
The four pillars of investment are purchasing at a discount, positive cash flow, acquire and hold, and creating new opportunities (development).
(Next week I will go over each pillar and what the strategy entails)
When you have your pillars (strategies) designed, and they have been built on strong foundations, you can then begin to review the current market and cycle and then use our compass to make purchase decisions.
When it comes time to make a decision about buying or selling property this is what you do.
In the Palazzo De Wealth, the left ‘CYCLE’ box you place Phil Anderson’s overall (macro) property cycle clock (above).
On the right ‘MARKET’ box you place the latest HTW (or similar) monthly property clock (below)
On the middle ‘ACTION’ box, you place our compass (below) as discussed in a previous Scribbles.
These additional tools help you make the right decisions in the market at that time.
Back to the Palazzo, moving up from the markets and actions, your portfolio is made of Active or Holding assets.
(Active vs Holding I will also cover in an upcoming scribbles)
Up one more step and you can see that a financial structure based on robust foundations, with strong strategies (pillars) constantly being measured against market conditions and forecasts, balanced with Active and Held assets, will give you Choices.
Lifestyle, Time and Giving
To have the ability to choose our time, what we do with it, the style of life we want and to give and be a positive impact to others, is not even measurable in dollar figures. It takes you well into a different headspace and for most people, signifies Financial Freedom.
The roof on the Palazzo De Wealth, is called Legacy. As you have built your structure well, looked after it with monitoring of markets and have it well balanced, you have created something able to be passed on to other generations, able to stand the test of time.
For people I talk to, even more so than Choices, Legacy is the stage they are aiming for. The desire to make an impact on others even after you are gone, is something that many of us want and few know how to do.
Our tools help you achieve these goals, all of them.
The short-term ones.
The long-term ones
The generational ones.
It all starts with good foundations…
If you want more information about buying property, need strategic advice or our buyers agency service, then contact us here or call now on 1 300 66 77 89.
Since 2004, Scotty North has been helping people buy the best properties for their needs at prices that simply speak for themselves.
Scotty has been instrumental in bridging the gap between financial planning and traditional real estate transactions through his property advice model.
Scotty North is a Qualified Property Investment Advisor (QPIA), with accreditation’s in financial planning, mortgage broking and real estate.
By carefully considering his clients’ goals and planning for market changes via demographics and trends, Scotty designs a future proof outcome not only specific to the client’s needs but dynamic in its execution with performance indicators and exit strategies built in.