{"id":10777,"date":"2017-03-21T07:00:28","date_gmt":"2017-03-20T20:00:28","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=10777"},"modified":"2017-03-21T07:00:28","modified_gmt":"2017-03-20T20:00:28","slug":"property-investing-fear-busters-michael-yardney","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/property-investing-fear-busters-michael-yardney\/","title":{"rendered":"Property investing fear busters – Michael Yardney"},"content":{"rendered":"

Property is a brilliant asset class for creating wealth \u2013 so why aren\u2019t more of us doing it?\u00a0\u00a0 Great question and one that I ask Michael Yardney<\/strong><\/a>.\u00a0 Statistics reveal that only a small number of Australians actually put their money into any properties beyond their own home and Michael says there are 2 main reasons.\u00a0 Hear what they are and how to overcome them \u2013 if that\u2019s what you want to do.
\nTranscript:<\/strong>
\nKevin:<\/b>\u00a0 There\u2019s no doubt about it. Property certainly is a brilliant asset class for creating wealth. That\u2019s what this show is all about, of course. We talk to successful investors. I often wonder why more people aren\u2019t doing it. Maybe they\u2019re sitting back and waiting for the market to change or to improve.
\nIf you\u2019re sitting there listening to this now and maybe you\u2019re wondering why you\u2019re not in the market at this stage and what are the things that are holding you back, Michael Yardney joins me to discuss this point.
\nGood day, Michael. It\u2019s a frustrating question I know I\u2019ve asked you on many occasions: if it\u2019s so good \u2013 and we know it is \u2013 why aren\u2019t more people doing it?
\nMichael:<\/b>\u00a0 I guess it\u2019s because they are scared. In general, I think the fear falls into a couple of categories: making a mistake and losing money, or some of them actually just believe that they don\u2019t have the know-how or the knowledge to do it successfully.
\nPersonally I\u2019d be more afraid to end up relying on my savings or superannuation or the government to look after me for my financial future in my golden years, Kevin.
\nKevin:<\/b>\u00a0 Michael, give me a bit more detail about some of these fears.
\nMichael:\u00a0 <\/b>I think currently at the stage of the market where the markets are more mature, some people are concerned \u201cWhat if my property doesn\u2019t go up in value? What if the cycle turns? What if my property goes down in value?\u201d I think it\u2019s important to understand that it will. At some stage the market will slow down and all properties \u2013 even good investment-grade properties \u2013 will track down a little but.
\nYesterday, I actually discussed this with a client, Kevin. I said to him, \u201cYou\u2019re right. The Sydney market is very strong and it\u2019s quite possible your property is going to drop. It could be 5% or 6%. Imagine if it drops 10%. We\u2019re only back to where it was last June.\u201d
\nIt\u2019s not going to happen overnight, and good quality properties where the markets are deep and where there are lots of people buying, selling, moving house, moving up, they don\u2019t drop much in value at all.
\nThat\u2019s just the way the market works. Don\u2019t be scared of it, Kevin.
\nKevin:<\/b>\u00a0 Analysis paralysis is another one, too, Michael. We can spend a lot of time educating ourselves, analyzing the market, and waiting for it to be right. Do you see that as a bit of a problem?
\nMichael<\/b>:\u00a0 It is a fear, Kevin, because people fear they don\u2019t have enough knowledge, and the answer is you never will. In fact, the beginning investor who thinks he knows it all is probably more dangerous to himself than the person who recognizes that they need to know more.
\nBut there\u2019s a happy medium there, so I think it\u2019s important to get going knowing that you don\u2019t know it all but having some good people around you who can help you with the bits of information you don\u2019t know.
\nKevin:<\/b>\u00a0 Michael, another thing \u2013 and this happened to me \u2013 was some of the advice that I was getting from other people, especially as you incur more debt. Well-meaning people \u2013like parents and brothers and sisters \u2013 say, \u201cWow, do you really know what you\u2019re doing? This is a lot of debt that you\u2019re taking on here.\u201d
\nMichael:<\/b>\u00a0 Kevin, the fear of debt has been one of the biggest things that\u2019s stopped people getting involved in property investment. I know in all my seminars I say, \u201cHands up anyone who\u2019s scared of debt,\u201d and most people giggle a bit but don\u2019t put their hands up. Then I say, \u201cHands up somebody who knows somebody who\u2019s scared of debt,\u201d and they all put their hands up and have a bigger giggle, because we know that that\u2019s one of the common things that holds us back.
\nThe question is what sort of debt? You can have good debt, which is against appreciating assets. You can have necessary debt, which is non-tax-deductible debt but debt against your home. And you can have bad debt, which is debt against depreciating assets \u2013 doodads, toys, things that go down in value. But good debt against appreciating assets in my mind isn\u2019t a risk at all.
\nKevin:<\/b>\u00a0 Michael, I can hear many people saying, \u201cYou make it sound so easy, but gee, there are a lot of ongoing costs involved in property investment, as well.\u201d This could be one of the reasons that holds a lot of people back as well, Michael.
\nMichael:<\/b>\u00a0 Yes it is. You\u2019re right, Kevin. It\u2019s nice having the rent come in but you have all of the outgoings \u2013 the insurance, the maintenance, the strata fees, vacancies. And that\u2019s what scares people a lot: the vacancies. \u201cWhat if the rent doesn\u2019t come in?\u201d
\nThese can all be handled, though, by a sensible financial structure, by having an offset account or a financial buffer, and a good mortgage broker can help you with this to make sure that you don\u2019t overcommit yourself.
\nYes, it\u2019s important to recognize it, but once you do, you can then work within your financial parameters so that you don\u2019t overcommit, Kevin.
\nKevin:<\/b>\u00a0 Michael, let me ask you a question just in closing out \u2013 and this comes from left field without notice. That is, what about the skill that you need to become a landlord? What have you found in going from sometimes being a tenant to being a landlord? Is it a mindset shift?
\nMichael:<\/b>\u00a0 Many people are not made out to be landlords, Kevin. In fact, most successful property investors know how to do it. Those who fail are the ones who get too emotional about it. First of all, some try to be cheap and do it themselves, and they get themselves into trouble. You shouldn\u2019t be dealing with tenants. You should have a property manager to protect you.
\nBut the other thing is expect that you have to have repairs, expect that the hot water service is going to blow, don\u2019t be disappointed when the tenant moves out. Don\u2019t take it personally. It\u2019s just a business.
\nGet a good professional there to protect you, having a good property manager. Just understand that there always will be outgoings and don\u2019t get emotionally involved in the little ups and downs of being a landlord.
\nKevin:<\/b>\u00a0 The other thing, too, Michael, I find is you have to delegate to your property manager. You have to give them the opportunity to manage it for you if they\u2019re good. But you cannot abdicate. You still have to be involved to a certain extent. As you said, you have to be prepared for some of those things that are going to happen.
\nMichael:<\/b>\u00a0 Yes, you do. Interestingly, this week, I had a discussion with somebody who was upset because they have to carpet and repaint their property and they hadn\u2019t got the money for it at the moment. I said to them, \u201cBut remember when we first set you up, we actually got you a financial buffer. How much is in there?\u201d And he said, \u201cI have $60,000.\u201d
\nI said, \u201cThat\u2019s exactly what this is for, John. Don\u2019t be upset that it\u2019s going to cost you $6000 to do this, because every five to seven years, you\u2019re going to have to put in new carpet, and every ten years, you are going to have to repaint it. It\u2019s just the cost of doing business.\u201d
\nAnd because he had the money there \u2013 which he didn\u2019t want to touch, but that\u2019s what it was there for \u2013 he\u2019s okay now. He\u2019ll get a good tenant because he\u2019s got a well-presented property, and life moves on.
\nKevin:<\/b>\u00a0 Good talking to you. Michael Yardney from Metropole Property Strategists.
\nThanks, Michael.
\nMichael:<\/b>\u00a0 My pleasure, Kevin.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

Property is a brilliant asset class for creating wealth \u2013 so why aren\u2019t more of us doing it?\u00a0\u00a0 Great question and one that I ask Michael Yardney.\u00a0 Statistics reveal that only a small number of Australians actually put their money into any properties beyond their…<\/p>\n","protected":false},"author":176692471,"featured_media":10781,"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-10777","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 investing fear busters - 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-investing-fear-busters-michael-yardney\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Property investing fear busters - 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