Time heals all wounds – or so they say. Jan Somers from Somersoft.com.au says that it does take time but rather than using time to cover mistakes, why not look at time being an important element in your strategy.

Transcript:

Kevin:  I want to talk about another myth, and that is that it doesn’t matter when you buy a property, just to hold it and time takes care of any mistakes you might make. To have a look at this one, I’m going to talk to Jan Somers from Somersoft.com.au. That’s software that will help you improve your property investment outcomes.
Jan, thank you for your time.
Jan:  My pleasure, Kevin.
Kevin:  How do you feel about that statement, “It doesn’t matter when you buy; just hold onto it.”
Jan:  My philosophy is time, not timing. That’s probably the best way of describing it.
Kevin:  Tell me a little bit more about what you mean by that.
Jan:  You have to have a length of time for property, I believe, to make it work, an absolute minimum of 7 years and preferably 10 or 20. It’s the length of time that you hold a property that is most important, rather than the exact timing of when you buy, because trying to pick the time is like trying to pick when the Spanish bus is going to come past. You don’t know; it’s not the same as a Swiss train. Timing is very iffy, very buzzy, and there’s usually not a good outcome if you’re relying on making a lot of money in a quick time. It just doesn’t work.
Kevin:  Generally, people who try to pick the cycles in the market will chase things like hot spots and so on, which are very risky.
Jan:  It’s a completely different end of the market to what I call investing. It really is the speculating end of the market if you’re relying on timing to make money. It becomes almost in the category of shares, where you’re taking a punt and a bet on the market, whereas if you’re buying for the long-term, you’re not taking a bet on the market; you’re taking a bet on the time.
I was reading an article the other day on Marcus Licinius Crassus, who in 55 B.C., made a lot of money by buying property and holding onto it.
Kevin:  In fact, a lot of the very astute investors I’ve met over the years… I hate to categorize people, but I think those in the Italian community are great at this. They’ll have property, probably even the first property they ever owned.
Jan:  It’s almost a European tradition that goes back hundreds of years to buy and hold property.
Kevin:  That buy and hold strategy, as you’ve just identified, is nothing new. I think those who get into flipping and things like that, there are lots of pitfalls. You can over-capitalize, you can get your timing wrong, and end up losing lots of money.
Jan:  It does and those people who rely on the timing and trying to pick the market are generally trying to make a short, quick dollar. My experience is, particularly for me, it doesn’t work. When I’ve looked at others, it doesn’t work, either. It’s very hit and miss.
Kevin:  Your strategy very much is to buy and hold, Jan?
Jan:  Has always been buy and hold, except for the one time we did try to make, I can’t say a quick dollar. It was back in the late ’80s when we did a renovation and expected to spend $10,000 and make $20,000 or $30,000. Much to our disgust, it was worth less when we’d finished than when we’d started, but holding it for another few years soon ironed out those little bumps in the market, and we were fortunate that the time corrected any mistakes that we’d made.
Kevin:  Yes, sometimes the quick buck looks really good and looks very profitable at the outset, but then by the time that you look at all of your on-costs and the time taken, there is not a lot of money left in some of these renovations.
Jan:  Looks good, sounds good, and if it sounds too good to be true, it is too good to be true.
Kevin:  It normally is. Very good advice. Jan, great talking to you. Thank you once again. A reminder, once again, about that great software company, Somersoft.com.au. It’ll certainly help you turn your portfolio into a more profitable one.
Jan Somers, thank you so much for your time.
Jan:  Thanks, Kevin. My pleasure.