01.

1
Bestselling author Cam McLellan
gives you the exact steps to succeed
in the 2021 property market.

The Ultimate Mini Guide to

Property
Investing 2021
THE WAY TO WIN IN THE 2021 PROPERTY MARKET.

Cam McLellan
with Michael Beresford
 The Ultimate Mini Guide To

Property
Investing
2021

Cam McLellan
with Michael Beresford

2
About the Authors

Cam McLellan
Successful property investor and businessman Cam McLellan shares the
knowledge that allowed him the option to retire in his 30s, build a substantial
property portfolio and a group of companies employing more than 150 people.
His companies have been named in nine BRW Fast Growth lists. He is
the bestselling author of My Four- Year-Old the Property Investor, a jargon-free
investment manual he wrote for his children. The book is a step-by-step
investment manual for those who wish to secure their financial future.
As an expert in Australian property investment, Cam now helps others
by sharing his knowledge and expertise. Through his company OpenCorp,
he empowers clients, colleagues and friends to build successful
property portfolios.
Michael Beresford
Michael Beresford is an experienced Australian property investment
consultant and advisor.
Michael purchased his first investment property at 25 and then proceeded
to buy four more properties on a single income over the next five years,
providing him with a solid foundation from which to continue to build his
investment portfolio.
As Director of Investment Services at OpenCorp, Michael is committed
to sharing his passion for property and broad investment experience
to deliver outstanding returns for everyday Australians. He has helped
over 1000 OpenCorp clients add $500 million in value to their
property portfolios.
Michael attains his greatest satisfaction through empowering his clients,
to see them grow their portfolio and achieve wealth they didn’t know was
possible when they began their investment journey.

1 The Ultimate Mini Guide To Property Investing 2021

Published by OpenCorp 2020
opencorp.com.au

© 2020 Cam McLellan

This publication is copyright. All rights are reserved.

Except as permitted under the Copyright Act 1968 (Cth),
no part of this publication may be reproduced, stored or
transmitted by any means, electronic or otherwise, without
the specific written permission of the copyright owner.
Disclaimer
While reasonable care has been taken producing this guide,
no guarantees are given in regards to the accuracy of its content
or the material provided in the web links. Property investing is
a complex field and it is ever changing. Every person’s circumstance
is different, and therefore no reader should rely solely or partially
on the information in the guide or the material in web links
provided by the author. Any person or organisation reading this
guide or obtaining the material provided in the web links is
responsible for their own investment decisions. The Open Group
of companies, its directors and employees are neither liable, nor
responsible for the result of any actions or losses incurred, whether
whole or partial, from the use of the content, information or tools
provided. The author is simply sharing information that he
personally uses himself when investing.

2 The Ultimate Mini Guide To Property Investing 2021

Table of Contents

About the Authors 1

Cam McLellan 1
Michael Beresford 1
Table of Contents 3
Introduction 4
Why have I written this 2021 guide? 4
What is my investment strategy? 6
Part 1 8
Inside the property industry: Why you should ignore the hype 8
Will property prices continue to grow beyond 2021? 9
How Do Market Cycles Work? 10
Counter Cyclical Investment Strategy 10
Market cycles: how to catch and ride each wave 14
Appreciate depreciation 15
Flipping while factoring in future market growth 16
Balance your portfolio – yield and growth 17
Become an expert in your chosen market or sub market 18
Forget short-term predictions and bank on long-term gains 18
Why you need to toughen up 18
The biggest mistakes made by property investors 20
Be aware of analysis paralysis 21
Knock out poor investment options! 21
Part 2 24
The Straight Line to Wealth 24
The Circle of Duplication 30
Part 3 32
Tools and Check Sheets 32
What are the 2021 Opportunities? 34

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Introduction

Why Have I Written This 2021 Guide?

The property market in 2021 is very different to what we saw two,
five and 10 years ago. While our investment strategies generally
remain the same, it is important to understand the landscape you’re in
and what it means when reducing risk and identifying opportunities.
This is the hardest lending environment I’ve seen, in more than 20 years. It
is even tougher than straight after the GFC. With that said, there are definite
opportunities to be had, if you know what you’re looking for.
The purpose of this guide is to help you understand what the 2021
property market looks like and where those opportunities are. It will
sharpen your focus, when investing in property.
Ultimately, the most important skill in property investing has nothing to do
with property. It has everything to do with mindset. Investing is not what
we’re brought up with. We are taught debt is bad and not to talk about
money. Bad news sells and we are bombarded by negativity in the media.
We are taught to follow the herd, whereas successful investing requires you
to be one of the minority.
It isn’t hard to invest in property, although it requires a different way of
thinking about money. It requires a growth mindset rather than a minimalist
mindset. The pension may have been sufficient in the past. But it’s not
today and will definitely not be enough in the future. You need to take
control of your own situation and take action to create a better financial life
for yourself and your family.
With dedication to your goal and a long-term view in mind, amazing things
are possible. This book is designed to help you take the first steps towards
achieving these goals. The strategy we adopt is not get rich quick. It takes
time. It’s get rich slowly, safely and securely by applying a proven process
to achieve a measured outcome and mitigate risk. There will always be talk
of a property bubble and the fact prices can’t keep rising.
I like to refer to a newspaper article which talks about how markets are
unaffordable and the dream of home ownership is lost forever.

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It goes on to say that the median house price in Sydney has grown to
$17,000 and the median house price in Melbourne has grown to $11,000.
The article was written on December 13, 1970.
This is proof, that in 1970 people had the same doubts they do today
because the same material is printed year after year, decade after decade. If
you took a long-term view and bought property in December 1970, I’m
sure you would be pretty happy today!
Filtering fact from fiction and taking the first steps to invest in property can
be daunting. I wrote this guide to give you the tools to make sound
investment decisions so you can reduce risk as you build your wealth.

As Part Of The Process We Will

Question your motivations. This is important because your

reasons will define your strategy.

Demystify the industry. I take away the smoke and mirrors so you
gain a clearer understanding of the property industry.

Identify excellent investments. I reveal my strategy for identifying

investment properties with exceptional long-term growth
potential.

Explore how headlines differ from reality. I explain what

motivates media stories and how these don’t help you achieve
long term growth.

Guide your decisions with tools and check sheets. My systems will
help you select excellent investment properties and manage your
portfolio, so you can leverage equity and build wealth at a much
faster rate.

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What Is My Investment Strategy?
The first step in creating your investment strategy is deciding what you
want to achieve. When I started out, I had a clear goal. I wanted my family
to be financially secure, so I didn’t have to work to have the lifestyle I
wanted.
Most investors I meet want that freedom and flexibility. They aren’t
chasing a private island, helicopter, mansion or mega yacht, although it is
fine if that’s your thing. You just need to be specific about your intentions.
Figure out how much money you need each year to achieve your goals. Put
in place an investment strategy that has you doing everything you can, as
soon as you can, to achieve them. In property investing, aiming for a target
keeps you focused and motivated.
As a teenager, I remember casually asking my mate Bruce what he wanted
out of life. Without hesitation he replied, “A wife, two kids, a dog, a house
and a Harley Davidson”. Bruce had a vision that was very real to him. I
wasn’t surprised when he had the dog, the house and the Harley by the time
he was 20. His wife and two beautiful daughters followed a few years later.
Knowing what he wanted was the key to his success.
Don’t be afraid to set goals because you might fail. Even if you don’t reach
your target, you will be much closer than if you never tried.

To be successful, you need to be happy being uncomfortable, rather than

comfortable and unhappy.

What Is Long-Term Growth?

Not everyone will have the same definition I do. My portfolios are built for
my kids and their kids, so I define a long-term investment as one that will
continue to grow in value for generations.
When you think of property investment this way, it makes decisions easier
because it reduces your options and cancels out some of the risk. There are
plenty of opportunities that suit my investment criteria but most simply
don’t stack up.

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The Power Of Compound Growth
I achieve my goals by taking advantage of compound growth; it's incredibly
powerful but it takes time. Einstein called it the eighth wonder of the world.
Compounding starts slow but it is amazingly powerful over time. I run a
course called Money Smarts for secondary school kids. Here’s an example
I use to get their head around the power of compound growth.
Let’s say you started with one cent which doubled every day, over a 31-
day-month. Day one you have 1 cent, day two you have 2 cents, day three
you have 4 cents and so on. After a week, you would have less than a dollar
but at the end of that month, you would have about $21 million!
The main reason people don’t achieve success through investing is because
they want results immediately.
When it comes to investing in property, be patient, build your portfolio and
play the long game. It takes time but it’s very effective.

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Part 1

Inside The Property Industry:

Why You Should Ignore The Hype
The most successful media content elicits an emotional response. In other
words, bad news sells.
For this reason, it is important to ignore hype surrounding the boom and
bust stories we are exposed to every day. This media is motivated by selling
excitement and fear and buying into the hype has the potential to derail
your property investing journey.
Most people trust the media to educate them about the state of the property
market, yet according to the Australian Bureau of Statistics Census data 87
per cent of Australians retire on the poverty line, reliant on a pension of
between $300 to $400 a week to survive.
Over the last year or so media hype reached fever pitch and the conflicting
information is confusing people. In 2020, a federal election year,
bank-imposed lending restrictions were still in place. The great news for
investors who have had trouble obtaining finance, is that the Australian
Prudential Regulation Authority (APRA) who govern the banks,
have provided instruction that lending restrictions be reduced.
The most important thing to remember is that the hype will pass. As a
successful investor, you need a stable, consistent mindset. Remove emotion
to what’s going on and commit to your long-term approach.

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Will Property Prices Continue To Grow Beyond 2021?
The property market has faced some challenges in the last 30 years but I’m
yet to meet anyone who regrets buying a home in 1989.
While past performance is not an indicator of future performance, the
median house prices in Sydney and Melbourne have increased 452% and
529% respectively, since then.
In those three decades, there was a recession in 1991 and an Asian financial
crisis in 1998, which led to international stock markets losing about 60 per
cent of their value.
Surely major events like these, as well as September 11, 2001 and the GFC
of 2008, would have caused the market to crash, if it was going to do so.
Yet, if you bought 30 years ago, at the median, you are about $750,000
better off today. For this reason, I don’t speculate about short-term market
movements and take a long-term approach to investing.
I don’t have a crystal ball but I think prices will continue to grow. We aren’t
experiencing any crisis situations like those mentioned above. Instead,
what we have is a tough lending environment. That means not as many
people can borrow enough money to purchase properties above the median
house price.
We’re not experiencing a market crash, like the media would have you
believe. Once lending restrictions are relaxed and people can borrow again,
I'm sure we'll see the median rebound and increase.
On a larger scale, I believe property prices will continue to grow as the
government increases the number of skilled workers migrating to Australia.
Income tax from these new Australians is needed to pay for the
babyboomers’ pensions.
ABS data suggests that over the next four years the number of Australians
aged 65 and over will increase by 60 per cent. The government will need
to find around $24,000 for each single person and $36,000 for each couple
requiring the age pension.
Politicians would be eaten alive if they decreased the pension or charged
more personal income tax. Instead, they will create jobs and increase the

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skilled migration, to replace baby boomers leaving the workforce and grow
the economy while generating more tax revenue to pay the increased
pension.
From an investing perspective, skilled migrants will bring continued
demand for residential housing and when supply is not meeting that
demand, prices will go up. This makes me confident of continued price
increases.

How Do Market Cycles Work?

In 2017/18, media hype made it easy to think property market growth
would continue forever. Historically however, capital city property markets
see a sustained period of rapid growth over four to five years. Afterwards,
they experience a minor correction and stay stagnant for the best part of the
next five to seven years, before another growth cycle starts.
So, a minor correction, like we’ve seen in Sydney and Melbourne is not
unexpected. It is a natural part of the growth cycle and prices in these
markets will grow again down the track.
Don’t get caught up in all the talk of doom and gloom. Between 2013 and
2017 the Sydney market grew 75 per cent. Homeowners who were in the
market for the full growth period will still be 65 per cent better off, if the
median house price decreases by 10 per cent.
If you’re one of these people, I'm sure you're happy to be 65 per cent ahead
of where you were only five or six years ago!

Counter Cyclical Investment Strategy

Getting into property investing is not about getting rich quick. It is about
buying counter cyclically and entering a market before it sees that period
of growth, so you can take full advantage.
A counter cyclical strategy also means while there’s a buying frenzy going
on, you need to look at other markets.

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I see a lot of investors come unstuck because it takes them three or four
years to feel comfortable enough to take the plunge and they end up buying
at the top of the cycle. Then, because their property value doesn’t grow for
eight to 10 years, they lose confidence and think investing doesn’t pay off.
Really, it just comes down to market timing and location. Smart investors
know how to buy counter cyclically and that supply and demand affect
prices over the long term.
Property developers have the greatest impact on supply in any city market.
When I say developers, I mean medium and high-rise apartment block
developers and broad acre land sub dividers (developers who bring new
community estates to the market, such as master-planned estates).
We designed the next diagram to demonstrate to clients, how developer
activity affects market prices.

11 The Ultimate Mini Guide To Property Investing 2021

OpenCorp Development Activity Chain

Look at the supply and demand lines in the Development Activity Chain.
You’ll notice that at the point where demand outstrips supply, prices start
to rise. Developers see opportunities to make profits again and begin the
process of buying and delivering stock to the market. This is indicated by
the shaded section of the diagram.
It takes time to bring any large-scale development to market. During this
period, there’s a shortage of dwelling stock resulting in further price growth
and usually, rapid growth.
Most developers become active at the beginning of this and it can be two
to four years before their projects are ready for sale. By this time, the
market has often dropped off and there is an oversupply for up to 18 months
as stock continues to enter the market.

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As a result, prices correct and stagnate until the excess supply has been
sold. When demand drops below supply, developers will stop taking on
new projects.
As this timeline shows, there’s only one small window of time, ‘the danger
time,’ when it’s not advisable to invest in property.

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Market Cycles: How To Catch And Ride Each Wave
Each city is an individual market and should be analysed in that context.
When I think about the four major Australian cities (Sydney, Melbourne,
Brisbane and Perth), I view them as eight individual markets – four
residential and four commercial. This market clock diagram is an example of
the residential markets. I’ve again indicated here, the danger time for
investors. Please note, the market clock below is an example and may not
reflect where each market sits currently.
Smart investors buy at the start of a recovery period. Once the growth phase
begins and prices have been rising dramatically for two years or more, it’s
time to look to other markets. Experienced investors never buy an
investment property at auction. Why? Because winning an auction by
paying more than anyone else was prepared to, is not a smart investment
strategy.

Market Clock

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Appreciate Depreciation
Depreciation is the best tax benefit available to property investors, so it’s
surprising that few take advantage of it. Negative gearing is a good kick
back while you build your portfolio but spending $1 to get 50 cents back, is
not a wise long-term strategy.
Somewhere between 50 and 80 per cent of investors do not claim
depreciation as a tax benefit. The taxman undoubtably parties every year in
celebration. Especially when you consider investors could net $10,000 to
$15,000 on a new house, in the first year alone!
There are few downsides to depreciation. You don’t have to spend more
money to claim depreciation (apart from having a depreciation schedule
drawn up).
If your property was built after July 17, 1985, tax law states that it will
depreciate over a 40-year period. This is because while land appreciates,
buildings always depreciate. The ruling currently allows investors to offset
their investment against income at 2.5 per cent of the construction costs.
Fixtures, fittings and furniture depreciate at a faster rate.
Make sure you get a quantity surveyor to arrange a building depreciation
schedule for your accountant so you can maximise the offset allowed. The
cost of the depreciation schedule is also a tax deduction.

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Flipping While Factoring In Future Market Growth
Flipping property is the art of buying and adding value through renovation,
then selling a property as quickly as possible.
When I was growing up my folks tried flipping a few properties. I still
remember my Dad saying, “hurry up, holding this thing is costing us, let’s
tart it up”. The plan was simple: paint, carpet, tanbark, flip, but this game
plan didn’t always pay off.
Flipping a property is all about numbers and timing.
Most of the time investors forget to factor in all the costs involved:
• Stamp duty
• Legals
• Renovation costs
• Interest
• Marketing costs
• Agents’ costs
• Capital gains tax
• More legals
• Opportunity cost
After paying this lot, you will be lucky if there’s any profit left. Flipping
property is essentially trading. If done successfully, flipping is an income,
not an investment strategy.
Smart investors buy well and hold for the long term.

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Balance Your Portfolio – Yield And Growth
Balancing yield and growth is one of the keys to a healthy investment
strategy. For example, before my wife and I had kids we decided to rent
until 5 years ago although we had a substantial property portfolio.
We decided to live in numerous inner-city Melbourne suburbs, close to
the beach, where we rented two-bedroom apartments. Elwood was a
particular favourite.
We loved living in that apartment and could have bought it easily, but we
decided to rent because the high holding costs would have made it a bad
investment for us. I’ll explain further with a few basic figures.

2 Bedroom Smart Property

$300 p/w available Investment
Elwood
Apartment cash flow
$550,000
$800,000 x3
x1 $1.65m
$800,000 @ 8% growth
@ 9% growth

One of the reasons most property investors only own one property, is
because they buy a two-bedroom apartment in a blue-chip area like
Elwood. In reality, this $800,000 Elwood property will cost you about $300
a week to hold.
Compare that with an investment property valued at $550,000, with a
conservative holding cost of $100 a week. If you’re smart with your
investments, you can hold three properties with a total value of $1.65m for
the same holding cost as an apartment in a blue-chip area.

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Even if we give the blue-chip area an advantage of nine per cent annual
growth over a 10-year period as opposed to eight per cent, for the $550,000
property in a less suburb, you will be $1.67m ahead simply because you
made a smarter investment choice.

Become An Expert In Your Chosen Market Or Sub Market

When you decide to invest, it is important that you take the time to become
an expert on your chosen investment suburb. The best way to do this is
through good, old-fashioned legwork. Talk to council planning
departments, builders and shop owners. Find out about local amenities like
shops, schools, infrastructure, roads and rail. The more research you do
before you buy, the better equipped you will be to assess potential
investment properties.

Forget Short-Term Predictions And Bank On Long-Term

Gains
Beware of short-term price increase predictions. Even though city markets
are a passion of mine, I would never predict market price movements in
this way. I can tell you why I think one market is favourable to another over
a two or three-year period but I can’t say how much a specific house price
will increase by in the same period. No one can.
What I can tell you is, well-chosen properties will double in value within
10 years. Poorly chosen properties will sit stagnant for three to four years
slowing your process of duplication.

Why You Need To Toughen Up

When you invest in property, you have to accept that you’re not buying
your own home. So, don’t let emotion cloud your judgement. Conduct your
due diligence on the market and stick to your investment criteria.
Remember there are plenty of options out there. If you don’t find a property
that ticks all the boxes, move on.

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Equally, don’t be swayed by a real estate agent’s hype. They know how to
work every angle. It’s their job. If you live in the area, they will press all
your emotional buttons with comments like these.
• This is a lovely safe area.
• Doesn’t it feel homely?
• You’ll definitely get nice tenants here.
• You can drive past the house and keep an eye on it.
This is a total crock. Don’t let them fool you with these emotional hooks.
Toughen up. There’s no place for emotion in property investment.

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The Biggest Mistakes Made By Property Investors
• Listening to media hype
• Buying a property close to home (so they can drive past)
• Self-managing tenants
• Buying at auction
• Buying older properties (without potential to add real value)
• Buying based on the look or feel of a place
• Asking a real estate agent for advice
• Overcapitalising
• Selling for profit (when they should refinance and save the tax)
• Paying off debt (when they should create a redraw facility or use
an offsett account)
• Selling property to transfer into self-managed super funds (to
purchase property)
• Not including a finance clause in the contract
• Cancelling a contract under the ‘cooling off’ option rather than
the finance clause
• Failing to get an expert to review the contract
• Buying in regional or rural areas
• Not having a strategy for mitigating risk
• Waiting for the deal of a lifetime
• Buying for ‘future development upside’ on the open market
• Chasing the lowest interest rate option
• Not having the correct ownership or financial structures in place
• Not allowing for all purchase costs (stamp duty, mortgage
registration, lenders mortgage insurance)

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 • Taking an approved finance limit as an unconditional
commitment from the bank
• Selling property to finance lifestyle

Be Aware Of Analysis Paralysis

When I bought my first property, it’s fair to say I didn’t have a clue what I
was doing. When I went to sign the contract at the agent’s office he asked
for my conveyancer’s details. I gave him a blank look. What’s a
conveyancer? I bought that property because a mate had bought one in the
same street and his dad was a successful investor. So, I knew the odds were
pretty good that it was a smart buy.
Education and research are keys to smart investing but be aware of analysis
paralysis. If you spend all your time trying to find the deal of a lifetime,
you may pass up good investment opportunities along the way and end up
missing out in the long-term.
Do your research and then take the plunge. Enjoy the rush that comes from
taking action.

Knock Out Poor Investment Options!

Once you’ve decided on your investment strategy, it’s time to select your
investment property. Start by ruling out all the options that don’t meet your
criteria. It’s much easier than sifting through every option on the market.
It’s a bit like buying a new pair of shoes. If you’ve worked out that sturdy
brown shoes are what you need, you don’t have to look at every shoe
option.
When it comes to property, I like infill areas or master planned estates that
have limited land supply. Medium density housing is my investment
choice.
Why medium density?
I’ll explain this by a process of elimination.

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Apartments are a flashy investment option. There is something cool about
the thought of owning an apartment but most don’t meet my long-term
criteria. The reality is that most investors don’t have the know how or
resources to review the potential supply of additional apartments that may
come onto the market. This additional supply will potentially slow the
growth of their investments. So, for most people it’s safer to stay away from
apartments as an investment.
For most people, if you like apartments, rent one.
Regional properties generally double every 15 years as opposed to city
properties which double every seven to 10 years. The long-term
compounding growth difference is staggering. I don’t buy in regional areas.
Mining towns, at the time of writing are being given the hard sell. In most
cases, by the time the infrastructure has been built to support the mine, the
work force will drop by as much as 70 per cent, leaving a massive
oversupply of dwellings. What we see is prices and rental yields
plummeting, which is very unfortunate for investors.
I like medium-density housing located in infill areas. In my opinion,
medium-density housing includes a house or townhouse, on its own land
title of between 200m2 and 450m2.
Since I was a kid, the average house block has more than halved in size. As
an investor, I know that prices will double on a 300m2 block of land, the
same as the they will on a 600m2 block. The advantage is that a smaller
block requires less equity to enter the market. Also, people rent bedrooms,
not backyards so the rental yield is better on smaller lots.
What does infill mean?
An infill area is land surrounded by established housing. When all the land
has been developed in the area, the resulting pressure on supply usually
means prices will increase.
I also like master-planned estates with limited competition. A suitable
master-planned estate will have quality housing, local infrastructure and a
good community. I stay away from master-planned estates that have an
abundance of vacant lots nearby. I’m talking thousands of lots, enough to
build a whole new community. Be sure the master plan you’re considering

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doesn’t have large amounts of land that could be developed in the future
because this will slow price growth.
I spend a lot of time analyzing different areas so I can choose an estate that
gives me the best potential for long-term growth. I’m writing this on a flight
to Melbourne, after spending a few days in Brisbane checking out six
different estates, looking for one that fits my criteria. It’s important to put
in the hard yards to find good investments. I think the lady sitting next to
me is reading over my shoulder as I write.

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Part 2

The Straight Line To Wealth

The Straight Line to Wealth is the process I follow when selecting
investments to add to our portfolio. The straight line guides me from the
initial idea stage, all the way through to securing the right tenant. Each stage
is designed to reduce risk.

• The idea

• Setting up your team

• Finance pre-approval

• Identifying the investment

• Contracts
- Securing the investment.
- Established or land and building.

• Finance

• Settlement

• Construction (if required)

• Tenant

In this mini guide, I’ll focus on the investment identification section of The
Straight Line. This is the process experienced investors use to choose
property.

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Market – Area – Property
• The first step is to choose a city market with the best potential
for growth.
• Secondly find an area with a balance of yield and growth,
along with good infrastructure.
• Finally, select the optimum size and quality investment
property for the area.
This is the opposite approach to your typical investor who invests close to
home. Smart investors use the market > area > property approach because
it fast tracks your portfolio’s growth potential by allowing you to catch each
city’s growth wave. The faster your property value rises, the sooner you
can leverage your equity and acquire more properties.
Remember, it’s always Market – Area – Property.
Make it your mantra.

25 The Ultimate Mini Guide To Property Investing 2021

Investment Target

Let’s go over the process in more detail.

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Market
Growth trends. Stay away from markets that have undergone a period of
strong growth (10 to 15 per cent per annum) for more than two consecutive
years, because after every strong growth period you can expect a price
correction.
Check out other markets to see if they’re better positioned for future
growth.
Consistent population growth. When you’re looking at markets, always
check population forecasts. A low population growth forecast is a sign you
should steer clear of that city market.
Employment, wages and consumer confidence. People won’t buy when
they’re feeling insecure about their jobs. Higher wages mean people can
afford more expensive houses and we all want the best, it’s human nature.
Invest when consumer confidence is recovering.
Area
Employment. Check whether the property is located close to diverse
employment centres like offices, factories or industrial areas. Suburbs with
a large range of employers have more potential for long-term growth.
Excess supply. Check that the area doesn’t have an oversupply of dwellings
or a large supply of vacant lots near your potential investment.
Owner-occupiers. You should always buy in areas where the majority of
properties are owner-occupied.
Vacancy rates. Ensure there is strong rental demand and that properties are
leasing within 4 weeks of being on market.
Essential services. The area should have schools, local shopping and major
retail centres, public transport, parks and sporting facilities located nearby.
Planned future quality of housing. Check whether there are controls over
the standard of house that can be built in the area. You don’t want to find
that a tin shack has been built next door to your investment.
Value indicators. Check whether there are plans to build new infrastructure
such as railways and roads in the area.

27 The Ultimate Mini Guide To Property Investing 2021

Property
Low holding costs. It’s important to achieve a good balance between rental
yield and capital growth to maximise tax benefits. The more you receive in
rental income and tax back, the less you pay in holding costs. Think growth
first then achievable yield. Rental yield is usually viewed as a percentage
and compared against the cost of the property.
Calculation
Rent = (weekly rent x 52) / purchase price x 100 Rent = $430 pw.
Purchase price = $550,000
Yield = (430 x 52)/550,000 x 100 = 4.1%
Optimum size and quality. Every area has a property that is optimum in
terms of size and quality. What I mean by this is, you will reach a point
where you’re overcapitalising because you’re not adding to the property’s
value or rental yield. For example, if you decide to build your property with
a media room, it might not add to the value and you may not receive
additional rent, although you’ve incurred significant costs. If you do your
research and get to know your investment area well, you’ll be able to
identify the optimum quality and size of property to aim for.
Established capital benchmark. Check how much owner-occupiers are
paying for comparable homes in the area. For instance, if you’re buying a
property and the maximum sale price nearby is only 10 per cent higher than
your purchase price, it doesn’t give you much room for growth. Aim to buy
in an area with an established capital benchmark at least 30 per cent above
the value of your potential investment.
Land content. This is the golden rule of long-term property investment.
Land increases in value and buildings decrease. The total site area must, in
most cases, be at least 50% of the total floor area of all buildings. This rules
out most apartments and small units.
Close to amenities
Your investment property should be close to:
• Public transport, including train stations and bus routes

28 The Ultimate Mini Guide To Property Investing 2021

 • Education facilities, including primary schools, high schools and
private secondary schools or colleges
• Retailers, including local supermarkets and within the catchment
of a major shopping centre
• Parks, including playgrounds and open spaces
New over old. Over the years we’ve bought many established houses and
added to the value. I think my wife Felicity must have painted at least six
or seven houses before she went on permanent strike. We now buy new
property instead and the main reasons are:
• Tenant appeal
• Maximum taxation benefits
• Minimal ongoing maintenance
• Builder’s construction warranty
In the tools section, you will find a ‘builders due diligence check sheet’ and
a ‘tenant assessment sheet’ to help select a builder and then a tenant.
Now that you have your investment and your tenant, you will need a system
to manage and grow your portfolio. I have included some tools to assist
you.

29 The Ultimate Mini Guide To Property Investing 2021

The Circle of Duplication
Sounds very Zen doesn’t it? Being a disorganised guy, I needed a system
to help me manage my portfolio and identify increases in equity that could
flag when it’s time to invest again. This is how it works.

Let’s break down each of the three points.

Part One
The Straight Line to Wealth. As you’ve already seen, this is the process
that enables you to identify worthy investments. The Straight Line to
Wealth is the first part of the circle. In the next section of this guide you’ll
find a diagram of the Straight Line to Wealth and associated tools.
Part Two
Monthly portfolio check. It’s important to check in on your portfolio each
month. On our website, you will find a check sheet called the Portfolio
Management Review Form.

30 The Ultimate Mini Guide To Property Investing 2021

Part Three
Six-monthly equity and rental check. This will determine if you have
enough equity to duplicate your investment. To do this you need to
compare sales of similar properties in the same area by using the Property
Review Check Sheet for each one. When you’ve checked each property,
compile your data into the Portfolio Equity and Rental Check Sheet to get
an overview of your portfolio.
I know it sounds like a lot of work but you’ll only need to do this every six
months. I can honestly tell you it’s worth the effort, so make a note in your
diary or calendar to check up on your equity. You may find that there are
periods of little or no movement. That’s just part of the cycle. You need to
sit tight through these periods because when the market turns you’ll be
making hundreds of dollars each night while you sleep.

31 The Ultimate Mini Guide To Property Investing 2021

Part 3 – Tools And Check Sheets

These diagrams explain the Straight Line to Wealth and the Circle of
Duplication. The tools and check sheets are listed next to each section.
Feel free to download them from the OpenCorp website
opencorp.com.au.
Straight Line To Wealth
Tools And Checks
The idea
Setting up your team
- Team Members Details Sheet.
Finance pre-approval
- Pre-approval Form.
Identifying the investment
- Market Review Form.
- Area Review Form.
- Investment Property Identification Form.
Contracts
- If building, complete Builders Due Diligence Checklist.
Finance
- Finance Check Sheet.
Settlement
- Alert your Property Manager and provide keys.
- If building, alert Builder and confirm start dates.
Construction
- Ensure you engage an independent Building Inspector to
monitor construction quality.
Tenant
- Have your Property Manager complete a Prospective
Tenant Check Sheet.

32 The Ultimate Mini Guide To Property Investing 2021

The Circle Of Duplication Tools And Checks

33 The Ultimate Mini Guide To Property Investing 2021

What Are The 2021 Opportunities?
When we look beyond Sydney and some parts of Melbourne, we see a lot
of opportunities available in 2021.
Potential investors have left the market due to lending restrictions and
media negativity. This means better opportunities are available for those
building their portfolio this year.
We are focused on the markets which have historically experienced growth
after Sydney and Melbourne, some of which saw their last major growth
cycle 15 to 20 years ago.
Rental yields will also increase over the next few years, as less supply
enters the market. When developers are active and supply levels are high,
we see fewer rent rises, although we experience capital growth.
During the correction period, provided we’re in quality areas where the
demand for rental properties is high, we’ll be able to charge higher rent.
So, if your borrowing capacity in the restrictive lending environment
doesn’t allow you to add to your portfolio, you can still take positive steps
to get closer to your next property purchase.
In the words of the world’s most successful investor, Warren Buffett, “Be
fearful when people are greedy and greedy when people are fearful”.
A perfect example is the Bitcoin craze. Everyone jumped on board to get
rich quick and it has since had a massive correction and many people
have lost money.
Residential property, on the other hand, is a proven performer, although it
takes time and patience.
To summarise, 2021 is a great time to take advantage of opportunities left
behind by those too fearful to invest and also to increase your rental
income.
If you enter the market now, and as the lending restrictions relax, you will
be ready for renewed demand and a kick in growth.
Keep emotion at the back door and do what you can, as soon as you can to
reach your goals.

34 The Ultimate Mini Guide To Property Investing 2021

All the best with investing in 2021.

Cam McLellan
cam@opencorp.com.au
& Michael Beresford
michael@opencorp.com.au

35 The Ultimate Mini Guide To Property Investing 2021

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 Notes

36 The Ultimate Mini Guide To Property Investing 2021

 Notes

37 The Ultimate Mini Guide To Property Investing 2021

 Notes

38 The Ultimate Mini Guide To Property Investing 2021

 ET
IN RK
W MA
TO TY
AY PER
E W RO
TH 1 P
2
E 20
T H
IN

The Ultimate Mini Guide

to Property Investing 2021
The straight line to wealth

In simple, jargon-free language, this mini guide is a step-by-step

guide to illustrate why following a proven system is so important
when investing.
Essential reading for anyone wishing to walk the straight line
to wealth.
Its vital lessons include;
– How to select the right city market, the right area within that
city and the best investment property for that area.
– The key ingredients to be a successful investor in todays
financial environment.
– Where the opportunities are in 2021.

1300 OPEN CORP

www.opencorp.com.au