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The Mirage of Overnight Property Millionaires: Distinguishing the Skilled from the Lucky - featured image

The Mirage of Overnight Property Millionaires: Distinguishing the Skilled from the Lucky

Following the exhilarating thrill of the property boom we experienced in 2020-21, a new breed of self-proclaimed property investment "experts" has emerged.

These individuals, having reaped substantial rewards from the boom, are now gloating about their seemingly impeccable judgment and expertise, offering to sell you the secret to their success.

But beware - all that glitters is not gold.


Only a couple of days ago I was approached by a client of Metropole who bought a great apartment in Sydney’s Inner West, and while it had gone up in value considerably, she wondered whether she had done the right thing after having watched a video on YouTube of a young so-called property “Guru” who bought multiple properties in the last couple of years and was now ready to retire at the age of 30.

In fact, she told me that she remembered Warren Buffett’s quote: “Wealth is the transfer of money from the impatient to the patient”, but still couldn't help wondering whether she was following the wrong path 

I can understand where she was coming from. 

She was wondering are these individuals on social media were truly astute investors or merely fortunate outliers riding on the coattails of a surging market.

I explained this new breed of “get rich quick experts” are really just selling tickets to see unicorns because there are no “secrets” to getting rich quickly.

It reminded me of a warning I read a while ago…


Back in 2006, Howard Marks of Oaktree Capital warned of the danger of attributing too much value to a single success story in his memo 'Risk'.

He noted that during boom times, those who took the most risk often saw the greatest returns.

But were they shrewd or simply aggressive and consequently bailed out by favourable conditions?

Nassim Nicholas Taleb calls such people “lucky idiots,” and in the short term, it's hard to differentiate them from skilled investors.

Warren Buffett, the oracle of Omaha, gave a similar warning in his famed 1984 article 'The Superinvestors of Graham-and-Doddsville'.

Buffett’s article illustrates a coin-flipping contest where each of America’s 225 million inhabitants ( the population of the USA at the time) starts with one dollar.

Ten days into the contest, 220,000 people have consistently called the coin correctly, each making a thousand dollars.

Human nature being what it is, this success often leads to inflated self-perception and unmerited self-promotion by these winners.

After another ten days, 215 individuals remain, each having won a million dollars.

This small group is likely to get overly proud of their "technique," possibly even authoring books like “How I turned a Dollar into a Million in Twenty Days Working Thirty Seconds a Morning."

Buffett's story was to remind us that even if the same experiment was conducted with 225 million orangutans, the results would be much the same — 215 egotistical orangutans with 20 straight winning flips.

Does that make them skilled?

No, it means they are lucky.

This analogy, as humorous as it may sound, applies aptly to the property scenario. 


Now, there are more than 215 of these "lucky idiots" or "egotistical orangutans," boasting about how they've made fortunes from small investments, selling the narrative that you too can replicate their success with ease.

But it’s not just in the field of property, you’ll find them touting their prowess across digital platforms, from Twitter and YouTube to Instagram.

And somehow or other each of these individuals has managed to gather a following of over 215,000, exponentially spreading their 'get rich quick' rhetoric.

Buffett once said, “Only when the tide goes out do you discover who’s been swimming naked."

The dangers of these so-called experts cannot be overstated.

Not only are they misguiding novice investors with their anecdotes of easy wealth accumulation, but they also influence their massive followings to adopt this distorted narrative.

It's important to remember Sir John Templeton's cautionary words: "The four most dangerous words in investing are: this time it’s different." 

This time, indeed, is not any different, and the rules of prudence, diligence, and rational decision-making in investment still apply.

As the property market cools and the tide retreats, and it will again one day, there will be a lot of "naked swimmers" - individuals who lacked a sustainable strategy and are exposed for their lack of true investment acumen.

To avoid such a fate, it's crucial to differentiate between genuinely skilled investors and those who've simply been on a lucky streak.

Remember, expertise comes from experience, study, and consistent success over time, not from a single fortunate instance.

As you chart your investment journey, proceed with caution.

Don't fall for the intoxicating tales of easy riches, nor should you take advice from those whose success is more attributable to luck than to genuine skill.

Rather, rely on proven investment principles, thorough research, and sound advice from experienced investors with a track record of consistent success.


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 not as easy as this new breed of get-rich gurus are suggesting.

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!

Just to make things clear...buying an investment property is NOT a strategy!

It's important to start with the end game in mind and understand what you need and what you want to achieve.

And then you have to build a plan, a strategy to get there.

The property you eventually buy will be the physical manifestation of a whole lot of decisions that you will make, and they must be made in the right order.

That's because property investment is a process, not an event.

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 personalised, customised Strategic Property Plan.

We are much more than just another buyer’s agent, we help our clients safely build substantial property portfolios and create intergenerational wealth but it all starts by building a customised personalised plan for them.

When you have a Strategic Property Plan you’re more likely to achieve the financial freedom you desire because we’ll help you:

  • Define your financial goals;
  • See whether your goals are realistic, especially for your timeline;
  • Measure your progress towards your goals – whether your property portfolio is working for you, or if you’re working for it;
  • Find ways to maximise your wealth creation through property;
  • Identify risks you hadn’t thought of.

And the real benefit is you’ll be able to grow your wealth through your property portfolio faster and more safely than the average investor.

Another significant benefit of having a strategic plan in place is SQL stops investors from doing things they shouldn't do -  it will stop them from getting caught up in the hype of get-rich-quick schemes.

Click here now and learn more about this service and discuss your options with us.

Your Strategic Property Plan should contain the following components:

  1. An asset accumulation strategy
  2. A manufacturing capital growth strategy
  3. A rental growth strategy
  4. An asset protection and tax minimisation strategy
  5. A finance strategy including long-term debt reduction and…
  6. A living off your property portfolio strategy

Click here now and learn more about this service and discuss your options with us.

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 one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.
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