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October

2014

5 Lessons of a Property Investor

There are many reasons why people invest in property. Some do it well with multiple portfolios whilst many only achieve a portfolio of 1 or 2 properties. Why is it then that some people do well and others not so? There are many guides and resources now available for the property investor and many companies making money off the would-be property investor. I suppose the trick at the end of the day is for one to sort through the fact from the fiction and research well. A long term goal is also a prerequisite as well as a sound and viable system to buying each investment property.

Lessons that have been learnt by many a property investor over the years are these.

Lesson 1. Follow a system that works. This involves research, research and more research. Many property investors end up with 1 or 2 properties and really don't have a proven system that works in all markets. Beware the companies who want to take your money and promise the world. These are not systems. There are many books available as well as reputable people who give seminars and the like for little money. You must make your investment decisions on sound financial philosophy and planning, otherwise it's just guesswork.

Lesson 2. Beware the Get Rich Quick schemes. The old adage is if it sounds too good to be true, it usually is. Real estate is a long term investment and always will be so beware the people and the companies who promise you riches in a very short time. Property Investment is a lesson in patience itself as property is like a fine wine and takes time to mature. The greedy investors lack patience and can best be summed up by a great Investor called Warren Buffet who said "Wealth is the transfer of money from the impatient to the patient."

Lesson 2. Beware the Get Rich Quick schemes. The old adage is if it sounds too good to be true, it usually is. Real estate is a long term investment and always will be so beware the people and the companies who promise you riches in a very short time. Property Investment is a lesson in patience itself as property is like a fine wine and takes time to mature. The greedy investors lack patience and can best be summed up by a great Investor called Warren Buffet who said "Wealth is the transfer of money from the impatient to the patient."

Lesson 3. There is a Property Cycle. Just as booms don't last for ever, neither do the downturns. One of the important lessons of this is that many investors don't have their upsides maximised whilst covering the downsides. The property cycle in Australia usually comes around every 8-10 years and repeats itself and has done so for many years. There is no evidence that this will not continue to occur for the foreseeable future. 

Lesson 4. Stay around positive people. Human beings are very emotive, and as such if you continuously listen to the doomsayers of this world, especially when it involves property in Australia, you will never invest. For how many years have these supposed experts doomed the Australian property market!  Positivity breeds itself just as negativity does. Listen to the experts by all means on both sides, but surround yourself with people and ideas that have and are successful and you will have soon have the same ethos.

Lesson 4. Stay around positive people. Human beings are very emotive, and as such if you continuously listen to the doomsayers of this world, especially when it involves property in Australia, you will never invest. For how many years have these supposed experts doomed the Australian property market!  Positivity breeds itself just as negativity does. Listen to the experts by all means on both sides, but surround yourself with people and ideas that have and are successful and you will have soon have the same ethos.

Lesson 5. Finally, remember it is about a property. Buying the best property you can afford in a proven location is no doubt part of a system that works. What some investors get caught up in are the promises and rewards for doing this differently. It might be an extra tax break or promised rent, however, the long term capital growth of the property in that area is below what a proven system would otherwise dictate. Remember the savvy investor will always make a  property investment decision  based on research and buy a property below its intrinsic value in an area that has above average long term capital growth.

Lesson 5. Finally, remember it is about a property. Buying the best property you can afford in a proven location is no doubt part of a system that works. What some investors get caught up in are the promises and rewards for doing this differently. It might be an extra tax break or promised rent, however, the long term capital growth of the property in that area is below what a proven system would otherwise dictate. Remember the savvy investor will always make a  property investment decision  based on research and buy a property below its intrinsic value in an area that has above average long term capital growth.

 

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