Mar 28, 2022
Today’s podcast will be a little different. Today I’m going to be
brutal. I’m not holding back and I’m going to tell you some brutal
truths about property investing You'll learn some of the things
that can go wrong. You'll learn about the frustrations of being a
property investor. You will learn some of the ways in which slick
marketing can lead you astray.
But stick with me. It's not all negative.
Understanding what could go wrong is one way of making sure
things don’t go wrong and you can enjoy the success a small group
of property investors enjoy.
The problem is most people who get involved in property
investment don’t develop the financial freedom they’re after.
- 50% of new investors sell up in the first 5 years
- Most investors never get past their 1st or second property
- Only 20,000 Australians own 6 properties or more.
Now, this is not the type of information most people tell you
about property when you first get started.
That’s probably because many of the people you speak with are
trying to sell you something – sometimes it’s a property – in other
cases it’s their services (buyers’ agents).
This episode is my attempt to redress that balance a little bit
and share some brutal truths about property that you don't often
Despite what some people will tell you, property
investment isn’t easy.
But it’s simple. Now that isn’t a play on words.
What I’m trying to say is that if you do what most property
investors do, you’ll get the same results as most property
investors get — and that’s not pretty.
You’ll be heading in the right direction if you understand the
following truths about real estate investing.
- Property markets go through cycles.
- There are times every property cycle when values
stagnate — sometimes for several years.
- And there are short periods when the value of your properties
will fall a little.
- A-grade homes and investment-grade properties are less volatile
– but property prices do fall at times, occasionally for several
years in a row.
- You need a significant amount of money to
- You do need money to invest in property.
- If you don’t have the financial discipline to save a deposit,
you shouldn’t be borrowing money to get involved in property.
- You can get rich over the long term, but it is not a
- It takes the average investor 30 years to become
financially independent through property
- Most investors waste the first ten years making mistakes and
learning what not to do.
- The next few years are taken up selling underperforming assets
and getting their financial house in order.
- Then it takes two or three good property cycles to become
wealthy through property.
- Of course, you can shortcut this by getting the right mentors
early in your journey.
- Saying "I'll be fearful when others are greedy, and
I’ll be greedy when others are fearful" is much easier than doing
- Most investors are overly optimistic during booms when they
should be cautious and most pessimistic during downturns when they
are surrounded by opportunities.
- No one really knows what the property market will do in
the short term
- While in the long term our markets are driven by fundamentals,
in the short-term human emotion and crowd psychology play havoc
with the best-laid
- Real estate investment is a game of finance with some
properties thrown in the middle
- Strategic property investors buy themselves time in the market
by having financial buffers in place to see them through the ups
and downs of the property cycle.
- Property investment is meant to be
- Make your investing boring so the rest of your life can be
- There is more free property information available today
than ever before, but much of it is useless
- Most market news is not only useless, but it is harmful to your
- Be careful who you listen to
- Rather than listen to the get-rich-quick stories, it’s worth
listening to those who talk about their mistakes and avoid the
spruikers who don’t — theirs are usually much bigger.
- There is virtually no accountability for the many
property gurus and their hot spot predictions
- I find it interesting that people who have been wrong about
everything for years still draw large crowds of followers looking
for the next get rich quick scheme.
- The more “comfortable” an investment feels, the more
likely you are to be taken by marketers or
- Avoid rental guarantees or promises of certain returns.
- Despite what most would like to think the biggest
difference between ultra-successful property investors and the rest
is not their property strategy or their investment
- It’s the way they think — their “mindset” and their Rich
- If you have credit card debt and are thinking about
investing — stop
- Become financially fluent before you start investing otherwise
the significant debt, you’ll take on buying property will most
likely overwhelm you.
- Residential real estate is a high growth, relatively
low yield investment, so don’t buy real estate for cash
- Of course, cash flow is important to keep you in the game, but
it’s capital growth that will get you out of the rat race.
- There are 3 stages of your property investment
- You first go through the asset accumulation stage which
requires leverage and owning high growth properties; then you
slowly reduce your loan to value ratio; until you can eventually
live off your “cash machine” of properties.
- However many properties you think you'll need to
provide cash flow for your retirement, double
- Now you're closer to reality.
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Shownotes plus more here:
The Brutal Truths about property investment that no one else will
Some of our favorite quotes from the show:
“If you’re looking for excitement, go bungee jumping. Go trail
bike riding.” –Michael Yardney
“Despite what the average person believes, though, debt is good.
As long as it is used to buy appreciating assets.” –Michael
“The very fact that you exist means you’re lucky.” –Michael
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