About Michael YardneyWell the election is over and life moves on, so today I would like to share a memory from when I was still a novice investor and one of my early mentors taught me that the four most dangerous words a property investor could say was “this time it’s different.”
Unfortunately in my early days of investing I ignored his advice, to my detriment, as I found that history does repeat itself.
The best way to explain what I’m on about is to look back to earlier this year as many of our property markets boomed and two extreme opinions came out. One group was suggesting we are in for a long boom and another was suggesting the property markets would implode.
At the time I made it clear that my view was that the extremists, in both directions will be wrong.
Why? Because history does repeat itself and having invested (some would say reasonably successfully) for over 35 years, I’ve learned some lessons.
Probably the most important lesson I have learned is to never get too carried away when the market is booming or too disenchanted during property slumps. Letting your emotions drive your investments is a sure-fire way to disaster.
To ensure you don’t get caught by the changes currently happening to our property markets, let’s look at 5 big lessons I’ve learned over the years:
Lesson 1. Booms don’t last forever
During a boom everyone is optimistic and expect the good times to last forever, just as we lose our confidence during a downturn. Our property market behaves cyclically and each boom sets us up for the next downturn, just as each downturn paves the way for the next boom.
Let’s face it…while the general economic news is still generally positive today, we know that over the next few years the buoyant market conditions will be followed by a property bust and then another boom.
Just look at how our markets have performed over the last 18 months – some areas have boomed and are now slowing down and other property markets have languished.
Going forward over the next decade we’ll have another recession – I’m not sure when but we have one every seven to 10 years and we’ll most likely have another depression one day – because history repeats itself.
The lesson from all this is that even as you take advantage of our booming markets, get prepared for the next phase of the property cycle. During the last cycle, most investors didn’t really have their downside covered or their upsides maximized.
Lesson 2. Beware of Doomsayers.
As long as I have been investing, I remember hearing people with excuses why property values will plummet. However in that time, well located properties have doubled in value every 7 to 10 years.
Fear is a very powerful emotion, and one that the media used to grab our attention. Sadly some people miss out on the opportunity to develop their own financial independence because they listen to the messages of those who want to deflate the financial dreams of their fellow Australians.
Lesson 3. Follow a System
Smart investors follow a system to take the emotion out of their decisions and ensure they don’t speculate. This may be boring, but it’s profitable. Let’s be honest, almost anyone can make money during a property boom because the market covers up most mistakes. But many investors without a system found themselves in financial trouble when the market turned.
Warren Buffet said it succinctly: “You only find out who is swimming naked when the tide goes out.” In other words, if you aren’t following a system that works in all market conditions you will be caught with your pants down when the market changes.
If you prefer to have consistent profits and reduced risk, follow a proven system. Make your investing boring, so the rest of your life can be exciting.
At my Understand What is Really Happening to our Property Markets seminars, that I’m currently conducting around Australia I will outline the proven system that I am using …step by step. If you haven’t already booked in please click here to find out about the top faculty of speakers and reserve your place now.
Lesson 4. Get Rich Quick = Get Poor Quick
Real estate is a long term investment yet some investors chase the “fast money.” You’ve probably met people like that – they look for that deal that will make them fabulously rich. When you see them a year later, they’re usually no better off financially and still talking about the next deal that will make them rich.
They are often influenced by the latest get-rich-quick artist with a great story about how you can join them and become stupendously wealthy. Their stories can be very compelling, even hard to resist. They often pander to the wishes of people who would like to give up their day job to get involved in property full time, but in reality it takes most people many years to accumulate sufficient assets to do this.
Patience is an investment virtue. Warren Buffet said it right when he explained that: “Wealth is the transfer of money from the impatient to the patient.”
Lesson 5. It’s about the property
You’re in the business of property investment, yet during the last boom many investors forgot the age-old property fundamentals of buying the best property they could afford in proven locations.
Instead they got sidetracked by glamorous finance or tax strategies and some lost out.
Smart investors do it differently. They make educated investment decisions based on research and buy a property below it’s intrinsic value, in an area that has above average long term capital growth and then add value creating some extra capital growth.
These are just 5 of the many lessons that I have learned over the years.
I will be sharing more with you as well as giving you my perspective of what’s really happening in our property markets at my upcoming “Understand what’s really happening to our property markets” seminars that I am currently conducting with finance strategist Rolf Schaefer and property tax experts Ed Chan & Ken Raiss.
Please click here now to find out more and reserve your place. We won’t be conducting a similar round of seminars until well into next year, so please join us now.
When you join us you’ll discover unbiased research that sophisticated investors have been using to profit in good times and in bad. The truth is… a select group of informed investors are smiling and excited about all these mixed messages, because they know that while the majority of Australians will wait for the confusion to clear, fortunes will be made by those who understand what is really going on in our property markets.
Even if you’ve been to one of our seminars before, please join us because we have no properties to sell – we’ll give you unbiased facts and the perspective you can only get from being in the market for more than 30 years. Click here now to find out more.
Between now and then I’ll keep you up to date with how to take advantage of the changes happening in our property markets in future updates, but it is probably appropriate to remind you that in changing times like we are experiencing, 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 to sell, so their advice is independent and unbiased. If you want to find out a bit more about what is happening in your local market and what our research suggests is in store for us, join us at a free property briefing in Melbourne, Sydney and Brisbane or with our associates in Perth. Justclick on this link to find out more and reserve your place.
As so much is happening in property nowadays I’ll keep you updated 2 or 3 times a week in my blog – just click Michael’s blog in the top menu items on this page and bookmark it, then come back regularly to keep up to date there, or on the property news page.
