“What if?” – two little words that could have meant the end of the modern world as we know it.
What if our fore bearers had been so paralysed by doubt and fear that they never ventured beyond their comfort zone in the cave?
Interesting thought, isn’t it?
Fear of the unknown leads humans to exist in a state of inertia, where they go through the same motions day in and day out because it’s familiar and won’t challenge them.
It’s also one of the biggest obstacles for potential property investors, because although real estate is familiar to us – we live in a home where it’s a commodity of emotion – it’s not quite so familiar to many as a commodity of rational, fiscal logic.
So recognizing the ‘What if?’ inner dialogue, which can signal the demise of a good investment career before it starts, and knowing how to prevent the ‘what if’ scenario from eventuating helps.
That’s why I’ve compiled a list of 5 ways we talk ourselves out of investing, and how you can talk yourself back into the game…
1. What if I buy a dud?
This is always a concern, regardless of how long you’ve been an investor.
Following a proven investment strategy and conducting due diligence, involving effective research and consulting local experts (such as an experienced buyer’s agent), is the best way to avoid buying a a problem property.
Of course real estate is pretty forgiving, with many a novice investor making mistakes and still walking away on top with a bricks and mortar asset, but of course it would be better to avoid them in the first place.
2. What if I can’t manage the mortgage?
Obviously the key to successful property investment is having the capacity to hold your asset(s) over the long term in order to maximise their capital growth.
If you purchase the right investment; one that appeals to both owner occupiers (who push up the value of similar properties around yours) and tenants (who’ll help you pay off your mortgage), you’ll already have half the battle won.
But just as importantly strategic property investors protect themselves through effective money management and planning.
They set themselves up with cash flow buffers in their lines of credit or offset accounts to see themselves through the early years of negative gearing or periods of cash flow shortfall such as unexpected vacancies or repairs.
Sure, there’s a chance that your investment property might be vacant for a while, or that a tenant could damage your asset, but you can be prepared.
Firstly you would have established cashflow buffer just for moments like these, and then there’s always landlord insurance to cover you for loss of rent and repairs as the result of tenant damage.
And let’s not forget the role of a professional property management team, who will market your premises, screen tenants, arrange lease agreements and handle all maintenance issues to minimise complications and maximise returns.
4. What if I get conned?
I’m not at all surprised that so many potential investors have this concern, given the current state of the financial services sector and the spruikers who abound in the real estate world trying to sell the latest off the plan project or developer’s stock.
Once again, avoid becoming a victim by undertaking thorough research and basing your investment decisions on a well-devised strategy that suits your objectives and financial capacity.
And always make sure you differentiate between independent advice and a paid sales pitch.
5. What if I lose money?
Real estate, like all other investment vehicles, comes with the potential for financial loss. But if you develop a plan based on clearly defined income goals and your personal circumstances, you’ll significantly decrease the associated risks.
It’s important to understand the nature of property cycles and the fact that even prime properties don’t increase in value every year – in fact they can decrease in value for a year or two every property cycle.
And it’s also important to realize that property is not a get rich quick scheme.
Wealth creation through real estate is a long term (sometimes very long term) process.
Along the way you’ll need to treat your investments like a business, rather than get emotionally involved, regularly review their performance and pro-actively undertake improvements on your investments and increase your bottom line.
Don’t leave your assets to the whim of market forces.
Instead create your own momentum and manage your property investment portfolio accordingly.
And don’t let niggling doubts keep you from climbing the property ladder.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
If you’re wonderingng what’s ahead for property you are not alone.
You can trust the team at Metropole to provide you with direction, guidance and results.
In “interesting” times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.
If you’re looking at buying your next home or investment property here’s 4 ways we can help you:
- Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! This will give you direction, results and more certainty. Click here to learn more
- Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3.5 Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property. Click here to learn how we can help you.
- Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
- Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.