11 Mar What stops investors in their tracks? – Josh Masters
We asked Josh Masters to tell us what he has observed, amongst his investors (he is a buyers agent), to be the stumbling block that holds some of them back. Although he struggled initially, he did give us a tremendous piece of advice.
Kevin: I’ve given my next guest somewhat of a difficult mission. I asked Josh Masters from BuySide.com.au to tell me what he figured was the single biggest mistake property investors make. He came back and said “Well, that’s actually pretty hard because I reckon there’s more than one.”
Good day, Josh. How are you doing?
Josh: Very well, Kev. How are you?
Kevin: Good, mate. You could probably put it into several different categories. Let’s talk about a few. What do you see are some of the common mistakes?
Josh: I definitely can put in a number of categories depending on where the property investor is at the time. I did feel it was a bit of a curly one because you said “Give me one,” and we can go into the details later, but I think the over-arching one always comes back to mindset.
I don’t care what industry you’re in or what you’re trying to achieve; if you don’t have the right mindset, you’re dead in the water. A lot of it comes back to fear of failure, fear that we’ll make a mistake.
Personally, I don’t think enough people invest enough in property or shares, or whatever they do, to look after themselves for the future because that’s essentially what we’re trying to do. We’re trying to create a life for ourselves, and I think a lot of people hold themselves back.
We know that only probably 20% of the population own a single investment property, and it drops off dramatically after that. But one property is not going to make you rich, so what are people doing? Is it a fear that they will make a mistake in the future, that they’ll make a wrong choice? It effectively stops us from taking action, and that’s what I see as the biggest thing in my line of work as a buyer’s agent.
When people come to me, they just don’t know what to do, how to go about it, and they’re looking for advice. But many of them stall because they get in a little bit of a panic. They go through that paralysis by analysis, and it really holds a lot of investors back from really achieving what they wanted to do.
Kevin: If they really think about it, to be cautious is one thing and to analyze, you have to do that to do your research. But I think after a period of time, Josh, I think people analyze so much, they actually start to look for reasons not to do something as opposed to looking for reasons to do it. You can actually over-analyze any situation.
Josh: I agree. And I’ve been there myself. Sometimes a lot of us have that perfection mode switched on, and we have to pull that back a little bit and just say we might not find the property that’s ten out of ten, but I’ve invested in properties that are sevens or eights out of ten and they’ve done phenomenally well. But the difference was I invested and the next guy didn’t, and two or three years down the track, that next guy is probably sitting there going “Is it the right time to invest?”
This is where that timing the market comes into play. Everybody knows that it’s not timing the market; it’s time in the market and those sort of clichés that we all know are true, but it’s the fear of failure that stops us taking action at the right time.
I think sometimes it’s better to buy an investment that’s just okay and will probably do medium to well rather than not getting into the market at all.
Kevin: I know we’re talking here about investors, but even with home buyers looking for a home for the family, if you go in with too big of a checklist, you’re effectively looking for ways to knock properties out as opposed to knock them in.
So, if you can find something that’s about 75% – okay, so maybe it needs maybe a deck or it needs some repairs or it needs a new paint job – that’s all stuff you can do to improve it, but it shouldn’t be a reason for you not to buy it. In other words, you’ll never, ever buy probably the perfect property, but you have to find one that’s close enough, and then you mold it to yourself, Josh.
Josh: That’s right. I talked to my grandfather about when he bought property back when he was really young. It’s really great to go and talk to old guys like that who have been there and done that sort of thing.
Kevin: You mean like me.
Josh: I wasn’t going to say that, Kev! But someone with experience, because it really puts in perspective the journey that they’ve been on to get to where they are today, and you realize that the property they bought back when they were 24 or 25 and then moved into for five to ten years, it was just a stepping stone.
Once people start to recognize that and relax a little bit around that, they realize that they don’t have to buy the perfect property today. It doesn’t have to be in the absolute best location they’ll live in forever. Then they start to relax into it, and they can buy something that’s good enough for the moment that they can afford and get into, and they can build on that.
Kevin: Josh, here’s a bit of old-person wisdom for you. Sometimes the only thing that you really need to get right the first time around is your marriage. All the other stuff you can change, but if you get the marriage wrong, I tell you what, it’s going to cost you a fortune.
Josh: I agree.
Kevin: Would you say that’s the single biggest? It really comes down to mindset, doesn’t it? You have to have the right mindset, you have to do your research, but then you have to take some action.
Josh: I agree. I think taking action is the single most important fundamental that investors need to put into their belt in the first place. Of course, once we get in there, there are a number of things that I see a lot of investors see. They get emotionally involved. They’re waiting for the perfect time in the market.
Everybody wants to know what the market is doing today, but does it really matter? We have some great fundamentals out there right now – low interest rates, etc. – but still people are balking. I think a lot of those things, we can dive further into it when we go to select a property.
I see a lot of people making mistakes around choosing the right kind of property but then disregarding the supply in the area. I think once you get into actually selecting a property, supply is one of the biggest fundamentals that people will make as a mistake in not recognizing how many units or houses are being built in that area or the surrounding area that will affect prices moving forwards – for example, development in the pipeline.
Kevin: Yes, in fact, a little bit later in this show I’m going to be talking to a mate of yours, Bushy Martin. He’s coming up later in the show, too, and in my conversation with him – a couple of old guys talking I guess – he said to me “You know Kevin, the best time to buy property was 20 years ago and the second best time is to do it today.”
Josh: That’s right.
Kevin: Pretty true.
Josh: It’s good wisdom.
Kevin: It is very good wisdom. Hey mate, I’m going to leave it there. Thanks for your time, Josh. Josh Masters is from BuySide.com.au and he is a great guy to talk to. Thanks for your time, mate.
Josh: My pleasure, Kev. Thanks for having me.