[Podcast] 11 rules for successful property investing in today’s market

What's the outlook for the Australian property markets for 2023?

There are so many mixed messages in the media, aren’t there?

If you are like many home buyers or investors you're wondering, should you buy, should you sell, should you hold?

If you've been listening to my podcasts you'll know I believe that 2023 will be a year when the property markets reset and a new cycle will begin, but what if I’m wrong?

Well, today I'd like to share with you 11 rules for successful property investing that I have seen hold true over the five decades I've been involved in real estate.

11 time-tested rules successful investors use to make their fortunes.

1. They take a long-term perspective.

Warren Buffet put it well when he said, "Wealth is the transfer of money from the impatient to the patient."

Property investing has always been a long-term game, and the longer your time frame and the better the quality of the asset you own the less important timing of the market becomes.

2. They invest, not speculate

All investment comes with an element of risk, but in my mind, it’s important to minimize your risks as an investor.

Smart investors make educated investment decisions based on research, evidence, and fundamentals.

3. It’s about the property

Wise investors never forget the age-old fundamental of buying the best property they can afford in proven locations.

They don’t allow themselves to get side-tracked by glamorous finance or tax strategies.

On the other hand, those investors who are lured by rental guarantees, tax incentives, or speculative off-the-plan one-off profits are likely to miss out over the next few years.

4. Property is a high growth low yield investment

While the argument about capital growth or cash flow investing will rage forever, sophisticated investors know the only way to eventually become financially free through property is to build a substantial asset base.

Sure, cash flow is necessary - it helps pay the mortgage and keeps you in the game, but capital growth (having a substantial asset base) is the only way out of the rate race.

5. Land appreciates

Smart investors buy properties with a high land-to-asset ratio.

That doesn’t necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.

6. Buy properties that will be in continuous strong demand

Of course, not every property in a given suburb will make a good investment or have similar capital growth.

Savvy investors understand that investment-grade properties are the type that will appeal to a wide range of owner-occupiers since they make up the vast majority of buyers.

After all, it’s owner-occupiers, not tenant or investor demand, that push up property values in the long term.

7. Demographics hold the key

Over the long-term demographics – how many of us there are, how we live, where we want to live, and what we can afford to live in – will be more important in shaping our property markets than the short-term ups and downs of interest rates, consumer confidence, and government meddling.

More of us are looking for secure, medium-density apartments and townhouses which will become the preferred style of living as we swap our backyards for balconies and courtyards.

8. Surround yourself with a great team

Successful investors surround themselves with a team of top consultants and know-how to discern an advisor, someone who is independent, from a salesperson.

9.  Real estate investing is a game of finance with some properties thrown in the middle.

Those investors who will flourish in the next few years will have set up financial buffers (in offset accounts or lines of credit) to help them ride the property cycles.

10. Understand where the risk really lies

While most investors think the risk lies in the property or the markets or factors outside their control, the biggest investment risk actually lies with the investor – their knowledge, their experience, and their mindset.

11. The property market moves in cycles

During a boom, everyone is an optimist and expects the good times to last forever, just as we lose our confidence during a downturn.

Truth is…our property market behaves cyclically, and each boom sets us up for the next downturn, just as each downturn paved the way for the next boom.

You need to plan

So while the property markets will create significant wealth for many Australians, statistics show that 50% of those who buy an investment property sell up in the first five years.

And of those who stay in the investment game, 92% never get past their first or second property.

That's because attaining wealth doesn’t just happen, it’s the result of a well-executed plan.

Planning is bringing the future into the present so you can do something about it now!

If you’re a beginner looking for a time-tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, I suggest you allow the team at Metropole to build you a personalized, customized Strategic Property Plan.

Links and Resources

Michael Yardney

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Some of our favourite quotes from the show:

“What is certain in these times of uncertainty is that some property investors are going to grow their wealth by taking advantage of the opportunity the market’s presenting them now.” – Michael Yardney

“I believe demographics holds the key.” – Michael Yardney

“During a boom, everyone’s optimistic and expects the good times to last forever.” – Michael Yardney

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