5 lessons property investors can learn from farmers

How often have you thought to yourself, if only I had more money, life would be that much simpler?

Do you feel like you never have enough?

Are you constantly spending your salary the day it lands in your account and then eagerly waiting for the next payday so your stocks are replenished and you can start consuming all over again?

This is the unfortunate reality of how most people survive.

They live to consume and in turn, are ultimately consumed by the driving need to earn more money.

However the problem with this logic is that often, the more money that comes to you when you have this mindset, the more you will ultimately spend.

Farmers do things differently

They are producers rather than consumers and work toward growing something from very little – a tiny seed in fact.

Smart property investors understand that they must nurture and grow their portfolio, producing the returns they desire in favour of consuming all they have, rather than ending up with nothing to show for it when they finally retire.farm

They share the farmer’s desire to see their efforts reap great rewards and understand the value of these 5 important farming lessons.

1. Look at your salary or wages the way a farmer looks at a seed

In other words, instead of focusing on consumption and spending, think about how and where you can ‘plant’ that income to create a return on your investment.

This will shift your mindset from wondering what you can buy with your money today, to future asset growth, cash flow and income.

2. Be patient and look after your investment the way a farmer tends his crops

A farmer understands the cyclical nature of primary production, nurturing his crops after planting and allowing time and seasonal influences to work their magic.

As a property investor, you need to understand that long-term market cycles (as with the seasons) and time in the market, will ultimately determine your capacity to produce a post-work income through real estate.

Remember: “Wealth is the transfer of money form the impatient to the patient.”

3. Be selective with how you use your growing asset base, like a farmer is selective with his harvest

A farmer takes the best seed from the top of his harvest to put aside for next season’s planting.

He certainly doesn’t scrape the bottom of the barrel, but focuses instead on quality.

As an investor, you need to keep an eye on your growing portfolio and know when to take out profit.

Now here’s the important part – in the asset building phase of your investment journey, you should only take out profit to reinvest for accelerated returns, just as a farmer re-sows the best seed to make sure each new crop is more bountiful than the last.

4. Each new cycle (or season) should be seen as a chance to grow your wealth

The farmer never ceases to look for opportunities to grow his crop. When the next harvest comes around, the cycle is repeated and the accumulative effects of seed, plus time, plus harvest are repeated all over again.

Like the farmer, you don’t want to consume the fruits of your investment labours, but continue to look for new buying opportunities that will enable you to use that good quality profit to acquire even more superior assets.

5. Work your investment portfolio, the way a farmer works his land

The farmer does not sit back and hope and pray that this season’s harvest will be bountiful.

Instead, he is pro-active in nurturing his land and ensuring his crops are fed, watered and weeded as necessary.

For property investors, the lesson is to be an active participant in the growth and sustainability of your portfolio.

This means taking care of your investments, regularly reviewing their performance and protecting them with necessary asset protection structures, cashflow buffers and insurances.

It also means keeping a close eye on the performance of your properties and if necessary, doing a bit of ‘weeding’ if you have underperforming assets that are threatening your harvest.

Remember, smart property investing is about the log term returns you ultimately produce at the end of the day.

To find success in growing your own crop of high growth assets, you must change your focus from consumption to production.

It really is that simple.

Here’s what you can do about this…

farm land country

If you’re looking for independent property investment advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties on the market to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat.

Or call us on 1300 20 30 30.

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Also published on Medium.

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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au

'5 lessons property investors can learn from farmers' have 3 comments

  1. October 10, 2014 @ 7:34 am Harry

    Thanks for anther great article and a very smart analogy- I love the quote – wealth is the transfer of money form the impatient to the patient


    • October 10, 2014 @ 7:42 am Michael Yardney

      Thanks Harry

      Not sure where I first heard this quote – I think it came from Warren Buffet


  2. October 13, 2014 @ 5:36 pm Cat

    This would make a great children’s storybook, I can see the pictures in my head. Thanks Michael.


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