11 Property Investment Lessons from the BRW Rich List

The rich are getting poorer according to the recently released BRW Rich 200 list.

The fact is that more than half (104) had a decrease in wealth over the past 12 months, even though they are far from poor.

This year Gina Rinehart was the richest person in Australia and became the richest woman in the world. The 58-year-old mining magnate’s wealth has ballooned by $18.87 billion in the past year to $29.17 billion. That equates to more than $1 million for every half an hour and almost $52 million a day.

By the way…Rienhart’s wealth is approximately equal to the wealth of the bottom half of the list.

So, what can we learn from Australia’s wealthy individuals?

1 . Property is still the number one source of wealth

Firstly, despite all the attention the mining billionaires have received, property still remains the single biggest source of wealth with 55 real estate entrepreneurs in the top 200 list, and many of those who didn’t make their fortunes in property have stored their wealth by investing in property.

This should come as no surprise – looking back over the years, no matter how the Australian economy changes, the Rich 200 has always been dominated by property entrepreneurs.

Remember, there’s nothing wrong with seeing what other successful people do and applying those principles to your own life. If so many extraordinarily wealthy people have used real estate profitably, it stands to reason that there’s money to be made in this sector.

The other lessons I learned by reading the various entrepreneurs’ stories are:

2. Anyone can become rich in Australia.

While 29 inherited some of their fortune, most on the Rich List were self made successes, some coming from working class backgrounds.

Attending a private school and an elite education is clearly not a prerequisite to joining Australia’s wealthy. While some forged important networks at school, many went to public schools and others didn’t even finish high school. In fact less than half have tertiary qualifications.

And, of course, the richest person in Australia is a woman. This year there are 15 other women in the Rich 200 List.

3. The markets move in cycles.

The stock market is down, commercial property markets are down and high end residential property values have fallen. This caused the average wealth of those in the list (other than Rienhardt) to fall 8.6 per cent.

However in the past many successful investors took advantage of the opportunities to buy assets when they were on special. So it will be interesting to see the results next year and how these counter cyclical investors fair.

The lesson: remember Warren Buffet’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.”

4. Make your millions and then reinvest it – don’t spend it.

This is really just using the power of compounding to grow your asset base before you start spending up big.

5. Take risks early on, but not once you are established.

While many entrepreneurs took big risks to get their enterprises going, successful investors then preserved their wealth by cautiously investing rather than taking further risks.

6. Have one good idea and repeat it.

One core trait that successful entrepreneurs share is the ability to take a good idea and repeat it over and over again. Look through the list and you’ll see so many entrepreneurs stick to the same concept for years and just expand in different locations.

7. Pick the trends.

This is different to picking fads, which are transient.

8. Go for growth.

Sure, cash flow is important but to become really rich you need a large asset base. While the average Australian tries to increase their cash flow, the wealthy are obsessed with building their asset base. Much the same as those on the BRW Rich 200 list who concentrate on building their balance sheets even more than they do on their profit and loss accounts.

9. Surround yourself with a good team.

As I’ve often said – if you are the smartest person in your team you are in trouble.

10. Take action.

All the people who made it onto this year’s BRW Rich 200 list started with a dream and then took action.

11. You’re never too young and you’re never too old.

The youngest member of the BRW Rich 200 is aged 36 and has an estimated wealth of $915 million, which is even more than the oldest member, who at the age of 92 has accumulated $360 million.

And if all else fails: try digging some dirt, you may find some valuable minerals.

What have you learned from Australia’s richest people?

What can you differently to become a successful property investor and get ahead of the pack?

What can you do about all this?

Like many of the Rich 200 list members, I would recommend building your asset base, by buying high-growth properties and adding value to them.

I recognise that we’re in times of economic uncertainty, but over the next 10 years we’ll have good times and bad. There will be periods of high interest rates and times of lower interest rates. And we’ll have periods of strong economic growth, but there will also be downturns.

Savvy investors count on the good times but plan for the downturns by having an asset protection plan, as well as a finance and tax strategy to make sure they set up their structures in the most efficient way.

However, achieving financial freedom from property investing may sound simple, but it’s not easy. And that’s not a play on words.

The fact is, around 20% of those who get involved in property investment sell up in the first year and close to half sell their property in the first 5 years.

And of those investors who stay in property, about 90% never get past their second property.

So if you want financial freedom from property investment to fund your dreams, you’re going to have to do something different to what most property investors are doing. You’re going to have to listen to different people to who most Australian property investors listen.

You’re going to need to set yourself some goals and follow a strategy that’s known, proven and trusted.

Then you grow your property investment businesses one property at a time.

Of course…you need to buy the right type of properties.

One that has a level of scarcity, meaning they will be in continuous strong demand by owner occupiers (to keep pushing up the value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long term averages), at the right time in the property cycle (that would be now in many states) and for the right price.

To become a successful investor you will need to surround yourself with a team of independent and unbiased professional advisors (not sales people) – a team of people who are known, proven and trusted, so 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 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. Just click on this link to find out more and reserve your place.

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About

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


'11 Property Investment Lessons from the BRW Rich List' have 7 comments

  1. Avatar for Property Update

    June 20, 2012 @ 12:26 pm Jane

    Thanks for that article Michael. Hope to see you on the list one day too. :)

    Reply

  2. Avatar for Property Update

    June 15, 2012 @ 9:26 pm Jaimee west

    Thanks for these insights. Yes anyone can achieve great success in Australia if they put their mind to it

    Reply

  3. Avatar for Property Update

    June 11, 2012 @ 6:13 pm Margaret

    Yes, I had quite a shock when one lunch time over coffee I opened the BRW Rich 200 and I had spotted our good friend on the list.
    I realised that his dream came true as he always wanted to own a mine and now he owns a few.
    I remember his obstacles and humble beginnings but I will never forget his desire and belief above all to follow his dream.
    I am sure his priority was the dream which in turn created the prosperity and financial independence…. These are great and inspirational stories for us all!

    Reply

  4. Avatar for Property Update

    June 10, 2012 @ 3:05 pm Stephen Findlay

    Nice Article Michael,
    Thanks for sharing your wisdom and positive mindset. I appreciate your untiring effort to create abundance and prosperity.

    Reply

  5. Avatar for Property Update

    June 8, 2012 @ 10:12 am KarenR

    THanks for this Michael – some great lessons here. Especially in our lucky country – anyone can become Rich – just apply some discipline and follow the lead of others who have done it before

    Reply

    • Avatar for Property Update

      June 8, 2012 @ 10:16 am Michael Yardney

      Well said Karen.
      Sure times are tough for many Australians at present, but their is a proven formula – let’s call it a recipe for success – follow the recipe others have used and you’ll end up baking the same cake they have created.
      We don’t all want to be int he Rich 200 list – that’s not my aim – but I think most of us want financial independence

      Reply


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