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Michael Yardney Podcast

Insightful, educational and always interesting

Listen and learn from Michael Yardney, Australia’s most trusted property commentator and a group of experts as they discuss Property Investment, Success, Money and Finance to help you multiply your wealth.
While Michael is best known as a property expert, he is also Australia’s leading authority in the psychology of success and wealth creation. You’ll enjoy the way he challenges traditional finance advice with innovative ideas on real estate investing, personal finance and wealth creation. 
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  2. 40 property investment lessons I learned in the last 40 years – Part 1

Jun 16, 2021

It should come as no surprise that the current property boom will create a new generation of wealthy Australians.

However, if history repeats itself, most people who get into property investment this cycle won’t become financially independent.

Just look at what happened during the last property boom, and the ones before that. 92% of those who held onto their property never got past the second property.

You can’t develop financial independence from just one or two properties.

Real estate has soared in value by more than 500% in the last 25 years, but most investors failed to develop a substantial portfolio.

So, I’ve put together a special two-part series to help you make the most of our property markets.

In today’s show and the next one, I’m going to share with you 40 property investment lessons I’ve learned in the last 40 years to help you become a successful property investor and create lifetime wealth.

Let me ask you a question…

With the benefit of hindsight and knowing what you know now, if you had the opportunity to do so, would you have bought an investment property 40 years ago?

I bet your answer would be yes.

But what if you didn’t have the benefit of hindsight and there we both were, back in 1980 and just as you were about to invest in a property I told you that in the next year or two Australia would fall into a recession and that in 6 years’ time negative gearing would be removed only to be reintroduced a couple of years later.

What if I told you there was going to be a stock market crash in 1987, and a severe recession in the early ’90s, meaning that in the first decade of owning your investment property you would have had to face all those headwinds.

Of course with the benefit of my time machine and you still being back in the 1980s as you planned to buy your first property I would also warn you about the upcoming AIDS scare and the SARS pandemic, the Asian financial crisis, September 11th, the Global Financial Crisis, the Coronavirus induced world recession.

Would still have had the courage to buy that property back then in 1980?

The answer for many people would now be: “No…why on earth would I invest in property knowing there are so many challenges, problems, and risks ahead?”

Of course, they would have missed out on some amazing wealth-building opportunities, wouldn’t they?

I was already investing for almost a decade back in 1980 and I did buy another investment property that year.

And over the years the capital growth I achieved from my investment properties allowed me to keep adding to my portfolio meaning that today I have a significant “cash machine” that gives me the lifestyle choices I was looking for back then.

Of course, along the way, I’ve had some great investment wins but I’ve also made more than my share of mistakes.

And I learned many lessons that I wish I knew back then, so here are…

40 property investment lessons I learned in the last 40 years

  1. The economy and our property markets move in cycles. Booms never last forever, neither do busts. That is mainly because most of us get swept up in the optimism or pessimism of others.
  2. Despite the ups and downs, the long-term trend for well-located capital city properties is rising values.
  3. Even though they are armed with all the research available in today’s information age, economists never seem to agree where our property markets are heading and usually get their forecasts wrong.
  4. Every year we get hit by an X factor – an unforeseen event or situation that blows all our carefully laid plans away. Then every decade or so we have a major event and the world “breaks.”
  5. There are multiple property markets in Australia.
  6. Property investment is risky in the short term, but secure in the long term. It is definitely not a way to get rich quickly
  7. Since property is a long-term game, don’t look for “what works now.” Instead, look for “what has always worked.”
  8. Residential property investment is a high growth, relatively low yield investment class. Don’t try to make it something different.
  9. At times of poor or no capital growth, strategic property investors “manufacture” capital growth through property renovations or development.
  10. Residential investment is a game of finance with some houses thrown in the middle.
  11. Taking on debt is not a problem. Not being able to repay debt is an issue, meaning cash flow management is a critical part of wealth creation.
  12. Property investment is a process, not an event.
  13. Strategic investors not only buy properties, but they buy themselves time to ride out the cycle by having financial “cash flow” buffers in place.
  14. Wealth is the transfer of money from the impatient to the patient. I must thank Warren Buffet for that quote.
  15. The media is not there to educate you, but its job is to get you to click on their links so that they receive revenue from their advertisers. So don’t rely on the media for investment strategy or advice.
  16. There will always be someone out there telling you not to invest in property.
  17. There will always be people out there telling you to invest in property. So, understand their vested interests – they don’t usually have your best interests in mind.
  18. Savvy investors surround themselves with a great team and are prepared to pay their advisors – they see it as an investment, not a cost.
  19. If you’re the smartest person on your team you’re in trouble.
  20. You are going to make investment mistakes along the way and you’ll either end up paying a significant learning fee to the market or you can pay your advisors and learn from their experience and mitigate your risks.

Resources:

Michael Yardney
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Shownotes plus more here: 40 property investment lessons I learned in the last 40 years – Part 1

Some of our favorite quotes from the show:

“Don’t be surprised when the booms and the busts come around and don’t overreact.” – Michael Yardney

“Over the years, I’ve found that it takes the average property investor around 30 years to become financially independent.” – Michael Yardney

“Knowing what not to do, in my mind, is just as important in achieving success as knowing what to do.” – Michael Yardney

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