{"id":5538,"date":"2015-09-01T01:00:15","date_gmt":"2015-08-31T15:00:15","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5538"},"modified":"2015-09-01T01:00:15","modified_gmt":"2015-08-31T15:00:15","slug":"5-property-investing-lessons","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/5-property-investing-lessons\/","title":{"rendered":"5 property investing lessons – Michael Yardney"},"content":{"rendered":"

 
\nIn today’s show Michael Yardney<\/strong><\/a>,\u00a0from Metropole Property Strategists, gives us the five property investing lessons you never want to forget.<\/p>\n

<\/h4>\n

Transcript:<\/h4>\n

Kevin:<\/b>\u00a0 Wise investors know that you can always be learning lessons. You have to look back sometimes to learn the lessons of the past. With our property markets now in a more mature stage of the cycle, it seems appropriate that we should reflect back and look at some of those lessons that we\u2019ve learned over the last few years.
\nThere\u2019s no better person to talk to about that than Michael Yardney from Metropole Property Strategists. No doubt you\u2019ve been looking a bit in the rear vision mirror, Michael?
\nMichael:<\/b>\u00a0 Yes I have, Kevin. I have learned a number of lessons along the way. Wouldn\u2019t it be nice to have known then what we know today?
\nKevin:<\/b>\u00a0 Yes, it would be. What\u2019s the first lesson?
\nMichael:<\/b>\u00a0 I guess the first lesson is that neither booms nor busts last forever. During the boom stage of the property cycle, everyone is optimistic \u2013 they expect the good times to last forever \u2013 just like we lose our confidence in the downturn stage.
\nCurrently, despite all the mixed messages in the media, people are still reasonably optimistic. It\u2019s just a thing that psychologists call recency bias. When you have lots of good news \u2013 like we\u2019ve been having in the property markets, particularly in Melbourne<\/a> and Sydney, for example \u2013 you feel good.
\nThe other thing that tricks our minds is something called confirmation bias \u2013 you actually look for information to confirm your predetermined decision that the market is doing really well, and you tend to neglect the other bits.
\nThe lesson is take advantage of property cycles as they occur, but be ready for the downturn. Be covered because this too shall pass.
\nKevin:<\/b>\u00a0 Lesson number two?
\nMichael:<\/b>\u00a0 There\u2019s always going to be doomsayers. As long as I\u2019ve been investing \u2013 it\u2019s over 40 years now \u2013 I remember people saying that property prices are too high and the market is going to bust. Fear is a powerful emotion, and the media use it to grab our attention. Sadly, some people miss out on opportunities to develop their own financial freedom because they listen to the messages of those who want to deflate our financial dreams.
\nYes, be cautious of this stage of the property cycle, but don\u2019t let fear take hold of your decisions.
\nKevin:<\/b>\u00a0 Good. Lesson number three?
\nMichael:\u00a0<\/b> Follow a system. Therefore, don\u2019t let emotions \u2013 and fear is one of them, as is greed \u2013 drive your investment decisions.
\nTo take the emotion out of it, get a system rather than speculate. This may be boring but it\u2019s profitable. Almost anyone can make money after the boom conditions of the last couple of years, but many investors without a system found themselves in financial trouble when the market turned down last time around.
\nI remember Warren Buffett clearly saying you find out who is swimming naked when the tide goes out. Kevin, the tide is going to go out in the future, so those who follow a system are less likely to be caught when conditions change.
\nKevin:<\/b>\u00a0 Those people who do follow a system, Michael, have you noticed they\u2019re the sorts of people who treat it like a business?
\nMichael:<\/b>\u00a0 Clearly, they do, but they have a reason why the want to invest. In my opinion, it should be for capital growth, but everybody is in a different stage in their financial journey, so some want to invest for cash flow. But they should be investing rather than speculating.
\nI\u2019m seeing a lot of people currently fearing that they\u2019re missing out, so they\u2019re looking for the get-rich-quick, the fast money. They\u2019re looking to bypass the banks, they\u2019re looking to do things in a way that isn\u2019t going to work, I guess.
\nAnother of Warren Buffett\u2019s good sayings to remember at this time is \u201cWealth is a transfer of money from the impatient to the patient.\u201d
\nKevin:<\/b>\u00a0 That would align with your fourth lesson, wouldn\u2019t it, about the get rich quick schemes?
\nMichael:<\/b>\u00a0 Yes, it is. Only recently ASIC jumped down on a number of what they call \u201cproperty spruikers.\u201d There are some promoters out there who are promising unrealistic expectations, unrealistic returns. Remember, if it\u2019s too good to be true, it probably is \u2013 or it\u2019s at least definitely worth exploring more before you jump in.
\nKevin:<\/b>\u00a0 In fact, on that point, we spoke to Ben Kingsley from PIPA about that on the show just last week.
\nLesson number five, Michael?
\nMichael:<\/b>\u00a0 It\u2019s actually about property. That\u2019s what we\u2019re involved in. But I hear people getting involved for depreciation<\/a>, or for tax benefits, or for negative gearing. Really, what you have to understand is don\u2019t look at these glamorous financial or tax strategies; smart investors<\/a> buy well-located assets that are going to be in strong demand by a wide range of \u2013 generally \u2013 owner-occupiers.
\nIn order words, to me, a good investment property is one that owner-occupiers always want, not one that tenants or investors are looking for. Then, buy that sort of property and hold it for the long term. That\u2019s likely to help you build your financial wealth, like a lot of others have.
\nSo, despite being at a mature stage of the cycle, I know a lot of people who are today looking back very happily, having bought in 2007 and 2008 before the market slowed down then, or in 2002 or 2003 when, again, we had the peak of the market and things slowed down. They bought well-located properties, were able to ride the cycle, and today are sitting back looking very happy.
\nKevin:<\/b>\u00a0 Very good, Michael. It\u2019s always good talking to you. You can catch up with Michael, of course, at his blog site: PropertyUpdate.com.au
\nThanks, Michael.
\nMichael:<\/b>\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In today’s show Michael Yardney,\u00a0from Metropole Property Strategists, gives us the five property investing lessons you never want to forget. Transcript: Kevin:\u00a0 Wise investors know that you can always be learning lessons. 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