No one wakes up one day and is instantly an expert in anything.
It usually takes years of practice to perfect any endeavour or skill.
This is one of the reasons why I struggle with the concept that property investing is seemingly “easy”.
Sure, buying a property might seem relatively simple on a transactional basis, but understanding which properties will grow at wealth-producing rates of return is not.
Remember…most properties currently on the market are not what I’d call “investment grade.”
I’m not ashamed to admit it took me years to become an expert property investment, with plenty of learning fees paid along the way.
So, to help you better understand the typical journey from novice to expert, here are the three stages in the life of a property investor.
Most investors start out either thinking they know not much at all or thinking they know too much!
The thing is it’s better to be the first incarnation because you have the opportunity to soak up new information like a property sponge.
First-timers should devote plenty of time to education, not just property but also they need to understand the world of finance, tax and the economy.
The smartest novices also start developing a team of experts whose knowledge and experience they can tap into, which will ultimately mean superior asset and location selection as well as less chance of failure.
The builder phase is when an investor might have one or two properties in their portfolio.
They are learning more along every step of the way, but hopefully not from too many major mistakes.
Moving through this stage will ultimately make the difference between creating wealth in the future or not.
Unfortunately, most investors never get past their first property.
Usually, they bought in the wrong location or perhaps even the wrong type of dwelling, such as an off-the-plan apartment, which has resulted in next to no capital growth.
They will be unable to keep growing their portfolio because they won’t have enough equity to draw upon and the rents which they need to service their mortgages, won’t grow to
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Instead, what’s likely to happen is they wind up being one of the 1.5 million investors who never get past their first property.
Unfortunately, few investors reach this stage.
To me, an expert is someone who not only has a vast knowledge of property but someone who has used their knowledge to build their own significant property portfolio.
The thing is, there are plenty of so-called experts out there who suggest a specific strategy as being the Holy Grail of property investment, but they don’t follow that strategy themselves.
Why don’t they put their money where their mouth is?
Quite simply, it’s because it’s not an investment strategy at all.
It’s just a vehicle to make money from unsuspecting and uneducated beginners.
However, real expert follows the exact same strategy as they recommend to their clients.
At the end of the day, there might be three stages in the life of a property investor, but most people next get past the first two.
Those who do reach expert status are the ones who have been investing for years across a number of different market cycles.
The pretenders are the ones whose knowledge and experience are limited – if you only know to scratch below the surface to see for yourself.
And in the current economic climate, that's who you should be listening to - someone who's been around the block a few times.
Unfortunately, the recent property boom has brought out a whole swag of new enthusiastic amateurs keen to give you advice on how and where to invest.
However, they have never invested through a period of rising interest rates or rising inflation.
In fact, many of them have not invested for more than a couple of years.
Who do you want to be guiding you and holding your hand during these challenging times?
Somebody who has the theoretical knowledge and is testing it out on you, or somebody who has done the hard yards.