{"id":10570,"date":"2017-02-28T07:00:30","date_gmt":"2017-02-27T20:00:30","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=10570"},"modified":"2017-02-28T07:00:30","modified_gmt":"2017-02-27T20:00:30","slug":"property-investment-101-michael-yardney","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/property-investment-101-michael-yardney\/","title":{"rendered":"Property investment 101 – Michael Yardney"},"content":{"rendered":"

If you’re looking to get into property or move up to the next rung of the property ladder,\u00a0Michael Yardney<\/strong><\/a>\u00a0has some words of advice.\u00a0 He calls it property investment 101 for rookies but it is much more than that.
\nTranscripts:<\/strong>
\nKevin:<\/b>\u00a0 This show, of course, is all about helping you build a good strategy and build a good portfolio. But what happens if you want to move to the next level, if you\u2019re uncomfortable with where you are now or even if you want to start? Let\u2019s have a look at some property investment 101 advice for rookies. Michael Yardney<\/strong><\/a> joins me from Metropole Property Strategists.
\nMichael, I guess you come across this quite often where you\u2019re very knowledgeable \u2013 as the rest of your team and you\u2019re dealing with this all the time \u2013 but someone comes to you and just says, \u201cLook, I just need some very basic advice.\u201d What would you say to them, Michael?
\nMichael:<\/b>\u00a0 Good question: where do you start? Because property investment is simple but it\u2019s not easy and, Kevin, that\u2019s really not a play on words. It\u2019s not something you enter into lightly, but for some reason, that\u2019s what a lot of people think they can do. They dream they can make millions of dollars with real estate and they just go off, and buy any house and they stick a tenant in and they think they\u2019re going to make a killing.
\nIt doesn\u2019t work that way. The market\u2019s been very brutal to a lot of investors recently, hasn\u2019t it?
\nKevin:<\/b>\u00a0 It certainly has.\u00a0 What are some of the pieces of advice you would give, Michael?
\nMichael:<\/b>\u00a0 I guess the first one is knowledge is power in property investment, so you need to understand what makes an investment grade property, because most properties aren\u2019t. In my mind, in the current market, where there are over 250,000\u00a0<\/b>properties for sale in Australia \u2013 which is actually a bit less than are normally on the market \u2013 there\u2019s probably only about 2% of those that would in my mind fall into what I would call investment grade.
\nFirst of all, you have to recognize that you make your money in real estate four ways: You make it through capital growth \u2013 that helps you build a sound asset base. You make it through cash flow, which you need to help pay your mortgage. You make it through tax benefits. And the fourth way you make your money in property is through forced acceleration by manufacturing some capital growth through renovations and development.
\nUnderstand how property works. Step one, Kevin, would be to get a good understanding of property, finance, and a little bit about economics.
\nKevin:<\/b>\u00a0 So understanding the market and understanding, too, I guess, Michael, that it moves in cycles. You and I have talked about this on a number of occasions, haven\u2019t we?
\nMichael:<\/b>\u00a0 Definitely. The next step is understanding that there\u2019s not one property market in Australia, and even in your own state, there are multiple markets defined by geography, defined by price points, defined by the sort of property, and that they are all at different stages of their own cycle.
\nWhile timing the market isn\u2019t the be all and end all of it, it certainly helps to understand how the market moves and where your current market is in its own stage of the cycle so that you don\u2019t get caught out as it turns.
\nKevin:<\/b>\u00a0 What about location? How important is that, Michael?
\nMichael:<\/b>\u00a0 In my mind, the location does the majority of the heavy lifting of your investment. While it\u2019s not exactly accurate, about 80% of the value of the property is in the growth of your property \u2013 the success of your investment is related to the location \u2013 and 20% is maybe that property within the location.
\nI look for demographics. I look for locations where people have higher disposable incomes and can afford to and are prepared to pay a premium to live there. In general, Kevin, these are the inner and middle ring, affluent suburbs of our big capital cities.
\nI also look for areas that are gentrifying, where the nature of the property is changing as well and more affluent people are moving in, because these people tend to spend money on their homes and improve the houses, therefore pulling up the value of other houses around them.
\nYes, you\u2019re right, Kevin; location is a critical component to the property game.
\nKevin:<\/b>\u00a0 I\u2019ve heard you say, too, that property investment is really a game of finance. So money is pretty important, Michael \u2013 how you handle money and how you strategize around it?
\nMichael:\u00a0<\/b>\u00a0Kevin, more so today than for many, many years. It always has been important, but if the banks will lend you more, you will then be able to buy more. So a well-rounded understanding of how to maximize your borrowing power by using equity and leverage to buy more properties is going to be important to you.
\nAnd just as important is understanding the power of having a facility like a line of credit or something like that as a cash flow buffer for when circumstances change.
\nKevin:<\/b>\u00a0 Michael, since we\u2019re talking about money \u2013 we\u2019ve talked about this \u2013 it\u2019s relatively easy to make lots of money through property investment, yet many people still manage to lose it. Why is that?
\nMichael:<\/b>\u00a0 Kevin, we\u2019re not taught how to do money. You\u2019re not coming out of the womb knowing how to do it. Therefore, we pick up bad money habits along the way and often from our parents and very much from our friends. The world and society is making it easier to do that with anyone able to get a credit card or a store card or interest-free for 24 months.
\nYes, to become financially independent you have to become financially literate. You have to become financially fluent. More than literate, you have to be good at it. Managing money, budgeting, balancing the books \u2013 they\u2019re basic things that you have to get to before you can even start managing a multi-million dollar property portfolio. But most people don\u2019t know how to balance their credit card, Kevin.
\nKevin:<\/b>\u00a0 That\u2019s right. Just sum it up for me, Michael. What would be the final words of advice or maybe the warning that you\u2019d give to investors?
\nMichael:<\/b>\u00a0 There are a couple of steps to it. First of all, formulate a plan. Understand what your end goals are, what you want to achieve, and then make decisions according to that.
\nBe cautious. Everyone\u2019s happy to give you advice, but rather than listening to all these well-meaning friends, not everything that glistens is gold. Not everyone can be a property millionaire, so take things with a grain of salt, I guess.
\nUnderstand the difference between a salesperson and an advisor, because everyone\u2019s going to be around wanting to give you advice when they suddenly hear that you\u2019re interested in getting into property investment. Instead, be prepared to pay for advice. I find that good advice is never expensive; in fact, it\u2019s much cheaper than learning from your mistakes.
\nAnd understanding what becomes a good investment property and not rushing off and buying the first thing you see and getting too excited by it all. Because property doesn\u2019t discriminate; it doesn\u2019t care who owns it. And even though we\u2019re going to have some interesting times ahead this year, over the next 10 years, our property values are going to double again. They\u2019re going to go up by billions and billions of dollars in Australia. They don\u2019t care who owns it, so you may as well own part of it and get it right and have your share.
\nKevin:<\/b>\u00a0 Indeed. Great words of advice, Michael. Thank you so much for your time.
\nMichael Yardney<\/strong> <\/a>from Metropole Property strategists. The blog for Michael \u2013 check it out for yourself. If you\u2019re not already subscribed to it, you should be. It\u2019s called PropertyUpdate.com.au.
\nThanks for your time, Michael.
\nMichael:<\/b>\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you’re looking to get into property or move up to the next rung of the property ladder,\u00a0Michael Yardney\u00a0has some words of advice.\u00a0 He calls it property investment 101 for rookies but it is much more than that. Transcripts: Kevin:\u00a0 This show, of course, is…<\/p>\n","protected":false},"author":176692471,"featured_media":10575,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,36,22,25],"tags":[101],"class_list":["post-10570","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nProperty investment 101 - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/property-investment-101-michael-yardney\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Property investment 101 - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"If you’re looking to get into property or move up to the next rung of the property ladder,\u00a0Michael Yardney\u00a0has some words of advice.\u00a0 He calls it property investment 101 for rookies but it is much more than that. 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