The excuses that stop investors | Michael Yardney [Podcast]


Too often people who want to get into property investing don’t and are continually coming up with excuses as to why they can’t do it.

In a recent Real Estate Talk show Michael Yardney from Metropole Property Strategists discusses some of the common excuses are that stop investors from taking that first step or even growing their portfolio.

Here’s a transcript of the interview:

Kevin: Michael – what are some of the reasons or excuses they use that hold investors back?

Michael:  They’re basically based on fear – fear of the unknown, fear of debt and even sometimes fear of success – but they doesn’t manifest as fear. michael-yardney2

Most people try to be logical, so they come out with reasons, or as you say, excuses why they can’t invest.

One of the common ones we’re currently seeing is “I don’t have enough money to buy a property.”

The answer is, this could be true because currently APRA is making it more difficult to get finance, meaning even though you can afford to buy a property, sometimes the banks don’t consider you have the serviceability – so they say you can’t borrow.

But interestingly, don’t use that as an excuse straight off.

Make sure you see an investment-savvy finance strategist who explores all of the options in the market, and don’t be scared of taking on lender’s mortgage insurance because as long as you own a good property – one that increases in value – taking those extra steps to get in because if you don’t, the market will keep moving on and you’ll never save enough to catch up with the market.

Kevin:  Sometimes that excuse or that reason could be because we’re looking for something that we probably couldn’t afford anyway. Some people try to outreach their own capabilities.

Michael:  Very much so, not only with investments but also with homes.

A lot of people want their first home to be just perfect – like the one they’ve just left with their parents, but they’ve forgotten it took their parents 40 years to get to that level.

Kevin:  What’s another one of the common excuses or reasons people use to avoid investing?

Michael:  People are sometimes concerned that the property market is unreliable, that it’s not safe. bank-savings-house-couple-save-property-meeting-budget-300x199

Again, they’re right.

We know that most investors fail because they’ve bought the wrong property – they have not bought an “investment grade” property.

It’s important to remember that some properties are much better investments than others.

In my opinion in the current market only 1% or 2% of properties could be called investment grade properties, so it’s a valid excuse unless you do your homework and research.

Kevin:  It’s not the market, is it? It’s actually the decision you make that makes it unreliable.

The market’s not unreliable in itself unless you make the wrong decision.

Michael:  Yes – because the risk doesn’t lie in the market.

It lies in the investor, in their head space, in the decisions they have made, in the finance they have taken on such as not having the financial buffers to see them through the market ups and downs.

You can’t separate risk from the investor who’s doing it.

Kevin:  Do we look for the quick fix, for it to happen too quickly?

Michael:  Yes,  many people are impatient.

We’ve become that way. That’s just our society.

If they can’t seem to get there quickly, if they can’t get rich quickly, they think “Oh, it’s going to take too long; I just can’t be bothered.” 

But it always reminds me of Warren Buffet’s beautiful saying, “Wealth is the transfer of money from the impatient to the patient.”

Kevin:  They’re too impatient.

Is that a generational thing?

Is that something that you’re seeing come through in the younger generations?

Michael:  yes – but it’s often these unrealistic expectations are often fed by the media and by all those e-mails we get in our inbox every day telling stories of rags to riches and instant wealth.

But they also talk about the Easter Bunny and Father Christmas, and they’re not true either when you get those e-mails.

Kevin:  There is a lot of that, isn’t there?

“I bought 100 properties in 18 months,” and when you really dig deep and you find out where they are, they’re not really going to grow much in value and they’re probably geared right to the hilt anyway.

It’s not a good story house property dream first home learn real estate

Michael:  No, it’s not.

Therefore, it’s best to start real estate investment with realistic expectations, knowing that it’s going to take on average 15 to 20 years to build a big enough asset base to replace your personal existing income.

Kevin:  Those types of people who talk about building those enormous portfolios, they rely very much on the investors who just don’t want to do their homework.

In other words, those looking for that quick fix, that quick answer because the majority of people don’t know what they don’t know about buying property and having tenants or investing in property.

Michael:  That’s another reason that some people use, an excuse they use, not to go forward. “I don’t know about it.”

It’s the opposite for some people too who have overconfidence because they live in a house, they’ve rented an apartment, and they think they know it all.

But the answer  for both of these groups is that there are answers out there – you find them by doing the correct research, by finding a good mentor, by finding a savvy finance broker and by getting an independent property strategist who’ll give you realistic and independent advice.

If you don’t know what you think you need to kow, get a good team around you.

Property investment is a team sport.

Kevin:  Is it fair to say that property investment is sometimes delayed or even bypassed as a way to building wealth because people have a lack of awareness aroundproperty investment psychology how it really works?

Michael:  Yes – We’re not taught how to do this.

You’re not born knowing how to do money, and despite 24 million people in the population, fewer than 2 million people own an investment property and the vast majority of those own one or two.

We don’t get financial education from our parents.

We definitely don’t get it from our teachers. The world doesn’t help the average person become a property investor.

You have to become the pilot of your own destiny, take it in your own hands. Learn, research, seek mentors, seek good advisors, and then, most importantly, take action.

Do something.

Don’t use the excuses.

Kevin:  That point you made about seek good advisors is very important in light of what we talked about earlier about people just rushing in and thinking that wealth can be built overnight.

It just doesn’t happen that way.

Michael:  The landscape is littered with people who have tried it and failed.

Kevin:  Thanks for your time.

Michael:  My pleasure, Kevin.

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Australia's leading independent property commentator, brings together leading authorities on the property market. Each week at Real Estate Talk we take a fresh look at the property market so you get all the facts to help you make the right choice.

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