{"id":25300,"date":"2016-09-07T01:00:33","date_gmt":"2016-09-06T15:00:33","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=9129"},"modified":"2016-09-07T01:00:33","modified_gmt":"2016-09-06T15:00:33","slug":"stuarts-property-story-2","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/stuarts-property-story-2\/","title":{"rendered":"Stuart’s property story – Stuart Wemyss"},"content":{"rendered":"

Our feature guest is Stuart Wemyss<\/strong> from Pro Solutions Private Clients.\u00a0 We dig deep to hear his personal stories about investment in property.<\/p>\n

 <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin<\/b>:<\/b>\u00a0 <\/b>Stuart, thanks for your time. Tell me, why did you get involved in property investment?<\/p>\n

Stuart:<\/b>\u00a0 It started, I guess the same as for most people, by reading \u201cRich Dad, Poor Dad\u201d by Richard Kiyosaki and in an effort to understand how to build wealth and create financial independence.<\/p>\n

While I learned lots of things from that book, and it was really enjoyable, I decided probably the best path to financial security was to become self-employed and build a business that generated a bunch of cash flow, and then use that cash flow to build a passive residential property investment portfolio.<\/p>\n

Kevin<\/b>:<\/b>\u00a0 <\/b>Was that book the launching pad for you to do that?<\/p>\n

Stuart: <\/b>\u00a0I think so. I remember a few years prior to that, having just finished my bachelor of commerce and just starting practice as an accountant, I remember looking at property investment. I couldn\u2019t understand how it worked. I thought, \u201cYou buy this property; is it going to lose money?\u201d I didn\u2019t really understand. It didn\u2019t make a lot of sense to me.<\/p>\n

A couple of years later, I read the book \u201cRich Dad, Poor Dad.\u201d I think that was the impetus, as well as probably a little bit of maturity, in thinking outside the square and doing some longer-term planning.<\/p>\n

Kevin<\/b>:<\/b>\u00a0What age were you when you picked that book up? Do you remember?<\/p>\n

Stuart: <\/b>\u00a0I would have been probably 23 or 24. Early days. That seems like a lifetime ago, now.<\/p>\n

Kevin<\/b>:<\/b>\u00a0 <\/b>When you did that and you made that decision to get into property or property investing and look at it seriously, do you remember how long it took from the time you made that decision? Tell me about your first property.<\/p>\n

Stuart:<\/b>\u00a0 A couple of years. At that time, my earning capacity was pretty limited \u2013 being young \u2013 so it took a couple of years. We first bought a home and then leveraged that into buying an investment property. But it did take a bit of time because we had to save some after-tax dollars for a deposit and wait for some equity to grow.<\/p>\n

Kevin<\/b>:<\/b>\u00a0<\/b>The first property you bought was your principle place of residence?<\/p>\n

Stuart:<\/b>\u00a0 Correct.<\/p>\n

Kevin<\/b>:<\/b>\u00a0<\/b> Were you married at that time?<\/p>\n

Stuart: <\/b>\u00a0Just about to get married. We bought it just before we were about to get married.<\/p>\n

Kevin:<\/b> Okay, you have a principle place of residence and then a few years saving a deposit. Do you remember what your first investment property was?<\/p>\n

Stuart: <\/b>\u00a0Yes, I do. Really, we bought that home as an investment property. We just decided to occupy it for a period of time. The aim was very much about getting some capital growth from that property.<\/p>\n

I remember we only paid about $150,000 for it, or maybe just a touch more. I think we contributed $20,000 or $30,000 as a deposit. We sold it for, I think, about $400,000 a few years later. We did quite well out of that and experienced a bit of growth. We sold that, and then we rented for a while and bought an investment property.<\/p>\n

The first investment property I purchased was an off-the-plan property in a smaller development. That was my first investment, and that was my first mistake.<\/p>\n

Kevin<\/b>: <\/b>\u00a0I was going to ask you that. Very good that you identified that. Do you still own that property?<\/p>\n

Stuart: <\/b>\u00a0No \u2013 sold it. I realized that was a mistake.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>Tell me, what was the lesson there for you? Why was it a mistake?<\/p>\n

Stuart: <\/b>\u00a0Firstly, it\u2019s hard to buy a property that isn\u2019t yet built, because you can\u2019t walk through it. You can\u2019t see how big it is. You can try and step out a floor plan, but until it\u2019s built and you can actually stand in the room and see how the light works and see how the floor plan works and imagine where the furniture can fit and whether it\u2019s livable, it\u2019s very difficult to make that assessment.<\/p>\n

The second one is to make an assessment as to the value of that property, because it\u2019s not built and lacks comparable sales. What\u2019s a true market value for that property? Is it the market value when I sign that contract or when expect it to be completed?<\/p>\n

Thirdly, there tends to be a lot of costs \u2013 which I didn\u2019t expect \u2013 when it comes up for settlement, like putting in blinds. They put some crappy down-lights in there, so the transformers would blow, and so we had to replace all of them. It\u2019s all these little unexpected costs that crop up.<\/p>\n

Add to that the chance of not making very much of a capital growth. All those experiences, I think, tainted that whole mistake \u2013 or maybe you put it down as a lesson.<\/p>\n

Kevin<\/b>: <\/b>\u00a0Many people would associate with that and probably have been in the same position and decided not to continue with their investment journey. Did that put you off at all, or was it just valuable lessons you learned?<\/p>\n

Stuart: <\/b>\u00a0It\u2019s a valuable lesson. Did property investment just did not work? The answer would be no; I just made a mistake. I took responsibility for decisions I made, and it was really that decision to buy that property was a mistake. It wasn\u2019t whether property investment works. I just used the wrong strategy. I chose the wrong asset.<\/p>\n

It didn\u2019t put me off. I was lucky. I sold the property and I made a little bit of money from it, so I didn\u2019t lose out on it. But I don\u2019t get any solace from that. It was still a mistake.<\/p>\n

Kevin<\/b>: <\/b>We\u2019ll talk strategy in just a moment, but if I could ask you at this point, from that lesson, if someone were wanting to start out in property investing today, what would be your advice to them?<\/p>\n

Stuart: <\/b>\u00a0My advice would be get in as soon as possible. Save the five percent deposit. Don\u2019t worry about mortgage insurance or anything like that. The cost of getting in, it\u2019s the [6:04 inaudible]<\/b>. Just get started.<\/p>\n

Save as hard as you can to get enough deposit to get started and focus only on the quality of the asset that you\u2019re buying. Instead of trying to optimize one or two or three different criteria, just focus on the quality of the asset.<\/p>\n

We\u2019ll talk more about that in terms of strategy, but it\u2019s like chasing two rabbits. If you chase two rabbits, you probably won\u2019t catch any of them. Just chase one rabbit. Pick the quality of the asset. Get that right and buy the best quality asset as soon as you can, and it should all work nicely from there.<\/p>\n

Kevin<\/b>: <\/b>\u00a0Let\u2019s talk strategy now. That first property that you bought, you learned a lesson from that and you sold it. Do you now have a buy-and-hold strategy?<\/p>\n

Stuart: <\/b>\u00a0Definitely. Buy and hold: capital growth. Buy the best quality asset. Don\u2019t speculate. Bet on sure things. A very low-risk boring strategy, but one that I think works well over time.<\/p>\n

Kevin<\/b>: <\/b>\u00a0Is that your mantra: something that is nice and secure, steady? You\u2019re not a speculator?<\/p>\n

Stuart:\u00a0 <\/b>Definitely. It depends. I think it\u2019s like playing golf and you\u2019ve got to choose the right club for the right shot. I very much believe, for myself and talking to clients, we need a core investment strategy.<\/p>\n

A core investment strategy needs to get us from A to B, which is typically from where I am today to maybe age 55 or 60 <\/b>or when I think I would like to retire or the latest I\u2019d like to work in my working career.<\/p>\n

\u201cIf everything goes wrong, how do I fund retirement at that stage?\u201d That\u2019s that I call a core investment strategy. I think that core strategy needs to be low-risk, safe, blue chip, boring but works. All those adjectives.<\/p>\n

Once a core strategy is implemented, then there are things that I might be able to do that bring forward that retirement date or improve my net worth position and that might be a bit higher risk.<\/p>\n

There\u2019s really only three ways to make money. It\u2019s investing, speculating, or business. That\u2019s when business and speculation may come into it, where I can afford to start taking higher risk knowing that my core investment strategy is under way and protected.<\/p>\n

Kevin<\/b>: \u00a0<\/b>There is no one strategy that works for all people, is there? There are a number of different strategies for different situations.<\/p>\n

Stuart: <\/b>\u00a0I guess it comes back to your risk profile and the time that you have until retirement. When I say retirement, maybe that\u2019s really more about passive cash flow and financial freedom, but however you want to define it.<\/p>\n

I think, theoretically, you can sit down and decide. There are some superior strategies out there, but there\u2019s no point trying to sell a point or a strategy to a client if it doesn\u2019t fit well with them, because ultimately, they won\u2019t adopt it for a longer term. At one point, they will become uncomfortable with it.<\/p>\n

It\u2019s a little bit like going to a property investor and trying to sell them the benefits of investing all of their money in shares. If they don\u2019t know it, they don\u2019t understand it, they don\u2019t like, they don\u2019t feel comfortable with it, theoretically, it might work for them. But practically it\u2019s just not going to work, because they might start doing it and two years later the share market drops five percent, and they say, \u201cSee, it\u2019s not going to work. It\u2019s not for me.\u201d They sell out.<\/p>\n

It might not be because shares don\u2019t work; it\u2019s because it doesn\u2019t suit them. You\u2019ve got to choose a strategy that suits you and that you like and understand and feel comfortable with.<\/p>\n

Kevin<\/b>: <\/b>\u00a0As the market cycles and changes, do you think there is a time when you can actually flip property, turn it over quickly and make a dollar? Or do you think it always needs to be looked at as a long-term proposition?<\/p>\n

Stuart: <\/b>\u00a0I think, again, if you bring it back to choosing the right club for the right shot, and is it part of our core strategy or is it something above the core strategy? The core strategy, I think, is very much long-term buy and hold, because the transactional costs of flipping property eat into the profit. You\u2019ve got to pay five or six percent going in and another two or three percent going out. You want to be assured of a pretty high margin to offset those costs, as well as the capital gains tax that you\u2019ve got to pay to the government.<\/p>\n

I suspect the answer is no, but I guess it\u2019s about always seeing the opportunities, as well. You\u2019ve to be open to them, as well. They might be right in front of your face, but if you\u2019re not open to seeing the opportunity, you\u2019ll never see it. Maybe there are opportunities where flipping does work.<\/p>\n

It\u2019s really interesting. I\u2019m addicted to watching property shows that are U.S.-based, and they do a lot flipping there. The margins seem to be really significant. I feel it\u2019s completely different to the Australian market.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>I sometimes wonder how legitimate that really is, or whether they\u2019re just picking best case scenarios. If you look at the U.K. shows, it\u2019s a totally different situation, isn\u2019t it?<\/p>\n

Stuart: <\/b>\u00a0Yes, that\u2019s right. How much is it to sell the show and a bit of hype? They probably don\u2019t talk about all the ones they\u2019ve lost money on.<\/p>\n

But going back maybe ten years ago, I think it would have been easier to flip property. Now, it\u2019s becoming a lot more difficult and I just don\u2019t think the margin is there.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>Do you think that\u2019ll change?<\/p>\n

Stuart: <\/b>\u00a0I don\u2019t think so. I guess it depends on the areas. But looking at the areas that I really study, which is the blue chip, inner-city, proven performers, I think that market is so saturated with such excessive demands \u2013 the demand is out-stripping supply \u2013 that I don\u2019t think the market will allow those arbitrage opportunities to exist. Whether that happens in regional or more outlying areas, I\u2019m not sure.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>Stuart, to date, what is the best deal, the deal you\u2019ve been most proud of?<\/p>\n

Stuart: <\/b>\u00a0The house we bought in 2008. It was just after Bear Stearns <\/b>in <\/b>the U.S. crashed. It was right in the heart of GFC. A property was up for sale that was kind of unique. It was two single-fronted Victorians, two-bedroom homes that were joined together to make a four-bedroom home in the suburb Prahran in Victoria, which is a great suburb.<\/p>\n

It\u2019s a little bit different. I thought that it was going to go well over my budget. I only wanted to spend about $1.2 and I thought it was going to go for more than that. It was later in the year \u2013November, approaching Christmas. I thought it was a great asset. It thought it was a great opportunity.<\/p>\n

I was a little bit worried. There were a lot of doom-sayers at that point: \u201cThe market\u2019s going to change, investing\u2019s going to change, the market\u2019s going to drop, everyone\u2019s going to go bankrupt.\u201d All that hype and hysteria was around at that time, so it was probably the worst time to make a decision and buy a property.<\/p>\n

I went to the auction, with the help of some property advisors, and was lucky enough to pick it up. That property is worth about $1.8 today.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>What did you pay for it?<\/p>\n

Stuart:\u00a0 <\/b>About $1.2.<\/p>\n

Kevin<\/b>: <\/b>\u00a0And you still own that property?<\/p>\n

Stuart:<\/b>\u00a0 Still own it.<\/p>\n

Kevin<\/b>: <\/b>\u00a0On another subject, if I could, Stuart, your pick in advising people, would you suggest they look at houses or apartments? Or don\u2019t you think it really matters?<\/p>\n

Stuart:\u00a0 <\/b>My view is probably two-fold. Firstly, buy the best quality property you can find. Whether it\u2019s a one-bedroom apartment, a two-bedroom apartment or a house, I don\u2019t really care very much. I just want the best quality property.<\/p>\n

If I\u2019m comparing a one-bedroom apartment and a house and I think the one-bedroom apartment is superior, excluding the fact of the size of accommodation, than I will invest in that one-bedroom apartment. It all comes down to, from my perspective, the capacity to double its value in seven to ten years and continue on that trajectory for the foreseeable future. Then there\u2019s an element or assessment of risk of whether that property can do that.<\/p>\n

I would rather, if I\u2019ve got the best one-bedroom apartment, and I think it ticks all the boxes and its past performance has been magnificent, I\u2019ll put my money into that every day of the week.<\/p>\n

Ignoring that, assuming you\u2019ve got two properties on equal footing there, I think it comes down to what\u2019s in your portfolio and getting a bit of diversification \u2013 geographic or tenant diversification, property type, all those sorts of things.<\/p>\n

From a financial planning perspective, if you can invest in smaller assets, dollar-value-wise, it gives you a little bit of flexibility going forward. You\u2019re typically going to get a higher rental yield across your portfolio, but it also gives you some flexibility to sell down one or two assets here and there as opposed to having two big, lumpy assets such as two homes, for example. It gives you less flexibility in that regard.<\/p>\n

Kevin<\/b>: <\/b>\u00a0When you\u2019re looking for the best type of property, do you take into account any value that you might be able to add to that property? Is that an important consideration for you?<\/p>\n

Stuart: <\/b>\u00a0It\u2019s very much a satellite consideration, and it comes back to my comment about chasing two rabbits. Almost 95% or 99% of my focus is making sure that I\u2019m almost certain that this property will double in value. Once I\u2019ve ticked that off, if there\u2019s some opportunity to maybe put a facelift on the kitchen or put a coat of paint or those sorts of things, then I\u2019m happy and open to doing those sorts of things.<\/p>\n

If it\u2019s more substantial improvements to the property, then I again consider whether that\u2019s going to fit my strategy. Buildings depreciate. Land appreciates. Do I want to spend money and get what is often a once-off or spurt in capital growth? I might spend $100,000 and the property improves by $200,000. That\u2019s nice, but that\u2019s a once-off thing. I\u2019m much rather have that compounding growth year on year, and that\u2019s what I tend to focus on.<\/p>\n

Kevin<\/b>: <\/b>\u00a0In those early days, when you were getting into property investment itself, did you have any mentors, people you turned to?<\/p>\n

Stuart: <\/b>\u00a0One of the very first property investment seminars I went to, even before I started my business \u2013 so it would have been 12 or 13 years ago \u2013 was put on by Wakelin Property Advisory, Richard Wakelin. I read the book that Monique and Richard wrote, \u201cStreets Ahead,\u201d and that tended to make a lot of sense to me. As someone who was very green to property and didn\u2019t really understand it, they explained it in a way that helped me understand it.<\/p>\n

I\u2019ve obviously gotten to know both of them over the course of business, and so forth. I think because they share very similar core values and belief in property strategy and so forth, I think they\u2019ve been mentors of that process.<\/p>\n

Kevin<\/b>: <\/b>\u00a0The Internet, of course, has opened up so many opportunities for people to do their own investigations, become more knowledgeable about it, and in some ways, it\u2019s made the world a much smaller place to live. Do you think that\u2019s opened up opportunities for people to invest overseas in property?<\/p>\n

Stuart:<\/b>\u00a0 It definitely has. I guess the U.S. is a really good example \u2013 something that has been on clients minds\u2019 for maybe the last four years and more, in terms of investing beyond Australia. I think we\u2019ve got to be really careful about doing so. I\u2019m not saying it doesn\u2019t work, but again, you are accepting high risk. You\u2019re accepting some currency risk, for example, as well as compliance risk, taxation risk, and those sorts of things.<\/p>\n

I definitely don\u2019t think it\u2019s for everyone. If someone wants to accept that high risk, I certainly hope they got their core investment strategy worked out \u2013 so they\u2019ve got a good, safe strategy that\u2019s ticking along here in Australia and that covers off all the risks. If they\u2019re then able to accept higher risk and take what is more akin to speculation to investing, in my opinion, then it works for them. But certainly the Internet helped that significantly.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>Coming back to Australia, investing in different parts of Australia, some people suggest that you can actually invest site unseen. Do you think that\u2019s a wise strategy?<\/p>\n

Stuart: <\/b>\u00a0No. No is probably the short answer.<\/p>\n

I\u2019ve always used a property advisor. Even though I\u2019m in the industry, I\u2019m not out there looking at property six days a week and I\u2019ve not been doing that six days a week for the last ten or 20 years, as some property advisors have. There\u2019s experience and knowledge. I can always get knowledge from reading books, but I can never get experience from reading books.<\/p>\n

I know as a financial advisor and an accountant, you can go off to university and do the degrees and studies and so forth in two or three years. In three years, you\u2019ll have the same amount of education as me, maybe a little bit longer, but you won\u2019t have the same experience so you can\u2019t give the same quality advice. What I\u2019m paying an advisor for is their experiences. I\u2019ve always used a property advisor.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>When you say a property advisor, do you mean a buyer\u2019s agent?<\/p>\n

Stuart:<\/b>\u00a0 Yes, but buyer\u2019s agents say, \u201cI\u2019m there to buy the property for you and negotiate to get you a great price.\u201d That\u2019s not what I\u2019m really concerned about \u2013 I can do that. What I want is \u201cFind me the best asset for my money, based on your experience.\u201d That\u2019s what I believe a good buyer\u2019s agent does.<\/p>\n

If I can find a buyer\u2019s agent who I know and trust on the ground, then I\u2019m happy to buy a property based on their advice. Obviously, he would have had walk through and see it and do due diligence, and so forth. But if it\u2019s just looking for a property on the Internet, I wouldn\u2019t. That\u2019s just too risky.<\/p>\n

Investing is all about getting the highest return for the lowest risk. Good investors like Warren Buffett always think about risk first. They go to mitigate as many risks as possible before they start thinking about what return they might get.<\/p>\n

Buying a property without seeing it, that\u2019s just asking for trouble, I think. That\u2019s just too risky.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>In looking around for a buyer\u2019s agent, it\u2019s a pretty important decision you\u2019re actually turning over to them, and that is that investigation stage. What sort of questions would you expect them to be asking you so that you get a comfortable feeling that they know what you need?<\/p>\n

Stuart: <\/b>\u00a0First, I think it\u2019s really important to understand you can\u2019t delegate responsibility. It\u2019s my money. It\u2019s my responsibility. You can\u2019t just blindly go and appoint someone and then expect them to look after your money like you do your own. There are lots of great, ethical people out there, and they will treat it as their own money. That\u2019s fine. You\u2019ve got to find those people. That\u2019s good. But I think my advice would be don\u2019t ever fall into the false sense of security that you now don\u2019t need to worry about it. It\u2019s your money and you need to look at it as your responsibility. You can\u2019t delegate it.<\/p>\n

In terms of asking questions, a good buyer\u2019s agent should understand what my key concerns are. They should be partly understanding what my key concerns and my primary objectives are, but also educating me about what my primary objectives should be.<\/p>\n

If I relate it back to my business, whether it\u2019s mortgages or financial advice, what I want to do is understand the client and understand what their goals are, and so forth. If I think they\u2019re going in a direction that I think is not right, then I need to educate them about why that direction is not right.<\/p>\n

If a buyer\u2019s agent meets me, I\u2019m going to tell them my goal is 100% capital growth. I just want the best growth he can give me and the rest, I don\u2019t really care about. I don\u2019t care where it is, if it\u2019s two-bedroom, one-bedroom. I don\u2019t care if it\u2019s art deco or brand new. I don\u2019t care about anything. Just give me a property that I can buy today and, if I want to, in 20 years, I can sell it and it\u2019s going to be three times the price that I\u2019ve just paid.<\/p>\n

That\u2019s all I want. A buyer\u2019s agent shouldn\u2019t need to ask me any questions beyond that.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>As a successful property investor, what would you say is the most common question that you get asked, and how would you answer that?<\/p>\n

Stuart:\u00a0 <\/b>That\u2019s a really easy one. The most common question I get asked typically is, in a couple of words, \u201cHow do I get rich quickly? How do I cut corners? How do I get from here to property millionaire in the quickest possible time?\u201d<\/p>\n

My typical answer to that is that there is no quick and easy way. A good, proven, safe, tested investment strategy takes time. If you don\u2019t want to put in the time, then you\u2019ve got to accept high risk, but it\u2019s akin to going down to the casino and putting all your money on black.<\/p>\n

That might be an extreme analogy, but we can\u2019t fool ourselves that if we\u2019re going to try and get rich quick, we have to accept high risk. Therefore, there is a high probability it won\u2019t work. The problem with doing that is that you waste time \u2013 time you\u2019ll never get back again. Money, you can always make back, but time, you\u2019ll never get back.<\/p>\n

If you want to spend the next five years chasing that rich quick strategies, you\u2019re going to waste five years, likely, and there\u2019s a very strong probability you\u2019re going to be no richer if not maybe a little bit poorer.<\/p>\n

We\u2019ll have the same conversation in five years\u2019 time and, at that point, you\u2019ll say, \u201cStuart, you\u2019re right. Slow and steady wins the race. It gets the highest returns for the lowest amount of risk.\u201d That would be my response.<\/p>\n

Kevin<\/b>: <\/b>\u00a0That leads me very nicely into my next question, which is what do you see as the essential qualities and the attributes of successful investors, renovators, or developers?<\/p>\n

Stuart:<\/b>\u00a0 I think, typically, humans are motivated by two main emotions: fear and greed. I think a successful investor ignores both those emotions. They don\u2019t get greedy. There\u2019s a saying, \u201cBe greedy whenever everybody else isn\u2019t.\u201d And the reverse. They don\u2019t get greedy, and they don\u2019t worried by fear.<\/p>\n

There are a couple of stories there when Warren Buffett invested in Merrill Lynch, right in the heart of the GFC when no-one\u2019s making any kind of investments. I can\u2019t remember the amount of money, but he\u2019s made billions of dollars from that one investment alone. He thought about his downside. He got a 10% yield on the bonds he invested, and they converted into shares at a really low price.<\/p>\n

If the stock price is going to go up and the market is going to go up, you make lots of money. If not, he\u2019d still get a good income return. He didn\u2019t get worried about fear. He looked at the company, the quality of the asset, the quality of the investment, and made a decision there. Similarly, to a much lesser extent, buying a property in 2008 when Bear Stearns crashed and the world was ending, everyone was fearful and didn\u2019t want to make a decision.<\/p>\n

But really, the fundamentals of investments don\u2019t change. As Warren Buffett would say, the fundamentals of what makes a good company don\u2019t change. The fundamentals of what makes a great property don\u2019t change. These things are established over time. They\u2019ve worked for the last 40 or 50 years. They\u2019ll work for the next 40 or 50 years.<\/p>\n

It\u2019s about ignoring the fear \u2013 your own personal fear and the fear that you hear out there, and also the greed. Don\u2019t pay too much for a property when everything is going up because you\u2019re worried you\u2019re going to have pay $200,000 in 12 months\u2019 time if you don\u2019t buy it today, and, don\u2019t buy a property now thinking we\u2019re in a bubble and it\u2019s going to crash next year.<\/p>\n

You\u2019ve got to really ignore those fear and greed motivators and run your own race, and that\u2019s what successful investors do, in my opinion.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>You\u2019re obviously a very successful investor, yourself. Do you continue to invest in your own personal development?<\/p>\n

Stuart:<\/b>\u00a0 Yeah. A business coach told me once, \u201cWork harder on yourself than you do on your business.\u201d By that, he meant continually educate yourself. You never stop learning. That\u2019s key: going out there and talking to people, reading books and going to seminars.<\/p>\n

You talked about the Internet. I think that\u2019s probably one of the best things for dissemination of information and content. These days, there\u2019s just a world of content available, and there\u2019s no excuse not to continue learning.<\/p>\n

I think, also, you can\u2019t underestimate the power of asking good questions. Generally, I\u2019ve found people are willing to share. Going out and finding successful investors and asking them ten questions, or finding unsuccessful investors and asking them ten questions \u2013 you can learn a lot just by talking to people asking the right questions. I think learning from people\u2019s experiences is the best kind of learning, rather than learning from a textbook.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>If you had the opportunity to sit in front of Warren Buffett right now, what would you ask him?<\/p>\n

Stuart: <\/b>\u00a0If he\u2019d adopt me?!<\/p>\n

I would ask him how does he ignore the emotions of fear and greed? How does he block that out? What was he thinking when he invested millions of dollars in Merrill Lynch at that point? Surely, he must have been nervous. How does he overcome those nerves?<\/p>\n

I think it\u2019s a natural human emotion. We\u2019re pack animals as humans. When everyone is fearful, we\u2019re going to be fearful. How do you block those emotions out and stay focused? The worst thing you can do is get emotional about money and emotional about decisions.<\/p>\n

That\u2019s why a lot of people get a lot of value from working with a financial advisor or accountant, because they\u2019re very unemotional about their money. They can look at it and say, \u201cNo, you\u2019ve borrowed too much. Don\u2019t borrow anymore.\u201d Or, \u201cYour fear of borrowing now is ridiculous. You\u2019re in a very strong position. You should borrow now.\u201d It\u2019s really about helping people past those emotions.<\/p>\n

That\u2019s what I would ask him. How does he manage them?<\/p>\n

Kevin<\/b>:<\/b>\u00a0 How much of that would come down to confidence in his own ability and belief in himself?<\/p>\n

Stuart:\u00a0 <\/b>I don\u2019t know. I\u2019d have to ask him. I would imagine it doesn\u2019t hurt to have that belief. I always tell clients the hardest investment you\u2019re going to have to make is your first investment. Once you invest in property, and assuming you make a good decision on your first investment, you can start to see it work, and you get a lot of confidence from that fact. That\u2019s why the first investment is the most important.<\/p>\n

I\u2019ve found that the people in our business who were investing through the GFC were experienced investors. First-time investors just didn\u2019t have the fortitude to make those sort of decisions in that market. I think having experiences and getting runs on the board and seeing what works makes you more confident. Then you have that ability to ignore all of the media hype.<\/p>\n

Kevin<\/b>: <\/b>\u00a0What does success mean to you?<\/p>\n

Stuart:<\/b>\u00a0 It\u2019s two-fold. Success means to me making the most of your opportunities. If you look at two clients, one earning a million dollars a year and one earning $70,000 a year, just because the million dollar person has slightly more net worth than the $70,000 person doesn\u2019t necessarily make that person successful, in my opinion. It\u2019s really about making the most of your financial opportunities. Maybe from an investment perspective, I guess that comes down to a net worth dollar of passive income and so forth, not that life is all about that.<\/p>\n

Secondly, success is just being comfortable with your achievements. Some people have very modest needs financially and only need a very small amount of passive income in retirement. Other people have very grand plans. I don\u2019t think either of those two types of people are any less successful than each other. It\u2019s really just about being comfortable with what you\u2019ve achieved.<\/p>\n

Kevin<\/b>: <\/b>\u00a0I think most people aspire to be successful. What do you think it is that actually holds them back from achieving what it is that they desire?<\/p>\n

Stuart:\u00a0 <\/b>Fear of failure, probably. Fear of making a mistake. Fear of looking stupid. I think those are probably the only things that stop people. It\u2019s easier. Humans don\u2019t want to make decisions. They\u2019ve got an aversion to making decisions because decisions are risky.<\/p>\n

I can procrastinate beginning my investment journey. It\u2019s probably not going to hurt me today. On the longer term, it\u2019s definitely going to hurt me, but today there\u2019s no pain in procrastinating. That way, I get out of making a decision that could end up making me look stupid or not working for me or losing me money. I think it\u2019s really just fear of making a mistake.<\/p>\n

But again, if we look at the context of the longer we have to invest, the longer the time horizon we have to invest in, the lower the risk we need to take. I\u2019d argue that there\u2019s no pain today from procrastinating another year before buying your first investment property. But there is an immense amount of pain in the longer term.<\/p>\n

A lot of people leave starting their investment journey until the kids leave home or they\u2019re close to leaving home and they think, \u201cWe need to start building our own base now.\u201d The problem with leaving it that late is now you\u2019ve only got a finite time until you\u2019d like to retire. You\u2019ve got to start taking higher risks to make it work.<\/p>\n

Kevin<\/b>:\u00a0 <\/b>Stuart, thank you very much for your time. It\u2019s been great talking to you.<\/p>\n

Stuart:<\/b>\u00a0 My pleasure.<\/p>\n","protected":false},"excerpt":{"rendered":"

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