{"id":5892,"date":"2015-09-27T01:00:40","date_gmt":"2015-09-26T15:00:40","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5892"},"modified":"2015-09-27T01:00:40","modified_gmt":"2015-09-26T15:00:40","slug":"4-most-dangerous-words-in-property-investment","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/4-most-dangerous-words-in-property-investment\/","title":{"rendered":"4 most dangerous words in property investment – Michael Yardney"},"content":{"rendered":"

 
\nIn today’s show\u00a0Michael Yardney<\/a>, from PropertyUpdate.com.au<\/strong><\/a>,\u00a0shares the <\/b>4 most dangerous words in property investment.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 I was attracted recently to one of Michael Yardney\u2019s blogs on his blogsite, PropertyUpdate.com.au. It attracted me, and it probably did to you, too \u2013 \u201cThe Four Most Dangerous Words in Property Investment.\u201d Well, it sucked me in, and they\u2019re pretty good, too. I was laughing all the way through it, only because I\u2019ve actually fallen into this trap.
\nGood day, Michael.
\nMichael<\/b>:\u00a0 Hello, Kevin.
\nKevin<\/b>:\u00a0 Firstly, tell me what those four words are. I know what they are, but tell our listeners.
\nMichael<\/b>:\u00a0 \u201cThis time, it\u2019s different.\u201d \u201cThis time, we have a low interest rate,\u201d or \u201cThis time, the stock market crash isn’t going to affect us,\u201d or \u201cThis time, the economy is not going to change things.\u201d People would like it to be that way.
\nIt\u2019s some advice I learned early from one of my mentors, and I found to my detriment that I wasn\u2019t paying any attention to it \u2013 thinking that this time it was going to be different. But you know what? History has a way of repeating itself, Kevin.
\nKevin<\/b>:\u00a0 It certainly does. There are some great hints about where we\u2019re going to go just by looking at the past, Michael.
\nMichael<\/b>:\u00a0 Very much so. While it\u2019s not exactly a replica of the past, there are very many lessons you can learn from the past. Maybe we could go through a couple of those now.
\nKevin<\/b>:\u00a0 Yes, we would love to have some lessons. What are they?
\nMichael<\/b>:\u00a0 The first one is booms don\u2019t last forever. That\u2019s actually pretty relevant for the moment. Everyone, during a boom, is optimistic and expects good times to last forever. That\u2019s just the way our mind works, just as we lose our confidence during a downturn. But I learned the hard way many years ago, that property markets are cyclical. Each boom sets itself up for the next downturn, just as each downturn paves the way for the next boom.
\nI think over the next couple of years our buoyant markets are going to slow down, especially in Sydney and Melbourne where we have really gone a little bit too fast. Every upturn is followed by a downturn, which paves the way for the next upturn. I\u2019ve found that most investors haven\u2019t had their upside maximized, but they haven\u2019t been prepared for the downside, either.
\nKevin<\/b>:\u00a0 Yes, so the lesson there, Michael?
\nMichael<\/b>:\u00a0 The property market moves in cycles, and some markets work in different stages at different stages of the cycle. Each state is at a different stage, and within each state, there are multiple cycles, Kevin.
\nKevin<\/b>:\u00a0 Yes, and be prepared for the next phase.
\nMichael<\/b>:\u00a0 Very much so.
\nKevin<\/b>:\u00a0 What\u2019s lesson number two?
\nMichael<\/b>:\u00a0 Beware of the doomsayers. Kevin, as long as I\u2019ve been investing, I remember hearing excuses why property values are going to plummet, and they\u2019re out there again today. But during those 40 years or so I\u2019ve been investing, the price of well-located capital city properties have doubled about every ten years or so.
\nSure, there have been periods when property values have languished, often for four, five, or six, years, and then they eventually catch up again, and it\u2019s underpinned by the fact that in Australia, a large percentage of our homes have properties that are owned by owner-occupiers.
\nHowever, fear is a very powerful emotion, and currently, the media is using it to grab our attention. Sadly, some people have actually missed out on great opportunities to secure their own financial independence because they\u2019ve listened to the message of those doomsayers, people who are wanting to deflate the financial dreams of their fellow Australians.
\nKevin<\/b>:\u00a0 I know of a couple of commentators, one in particular who we shall not name, but who actually believed the doomsayers. He went out and sold all of his properties and now would have to be regretting that he\u2019s done it.
\nMichael<\/b>:\u00a0 There have been a number of those. Kevin, you\u2019re right.
\nKevin<\/b>:\u00a0 Yes. What\u2019s lesson number three, Michael?
\nMichael<\/b>:\u00a0 Well, to stop all of this emotion, I think the answer is to follow a system. Strategic investors follow a system that takes the emotion out of their decisions. I know it could be boring, but it\u2019s actually profitable.
\nLet\u2019s be honest. Almost anyone can make money during a strong property market because, as they say, a rising tide lifts all ships. But many investors without a system found themselves in financial trouble each time the market turned.
\nI remember Warren Buffett clearly saying, \u201cYou only find out who is swimming naked when the tide goes out.\u201d I don\u2019t want to even think about that, Kevin.
\nKevin<\/b>:\u00a0 No. It doesn\u2019t bear thinking about.
\nMichael<\/b>:\u00a0 In other words, what I\u2019m saying is that if you aren\u2019t following a system that works in all market conditions, you could be caught with your pants down when the market changes.
\nKevin<\/b>:\u00a0 What about those get-rich-quick schemes, Michael?
\nMichael<\/b>:\u00a0 That\u2019s another reason to have a strategy, Kevin. That\u2019s a good point. Real estate is really a long-term proposition, yet some investors, I find, seem to be chasing the fast money. You have probably met the people, Kevin, yourself. They look for that one deal, that deal is going to make it all different for them. A year later, they\u2019re still no better financially and they\u2019re looking for another deal.
\nPatience is a virtue. Another great Warren Buffett saying is \u201cWealth is the transfer of money from the impatient to the patient.\u201d
\nKevin<\/b>:\u00a0 Yes, and finally, Michael, lesson number five?
\nMichael<\/b>:\u00a0 It\u2019s about property. What you have to do if you\u2019re in the property investment business is actually remember the fundamentals of well-located properties that are going to increase in value, rather than chasing the next hot spot or getting caught in the mining boom or getting caught in off-shore properties or options or land banking or other things.
\nThose who bought cheap properties in secondary locations or chased cash flows in regional areas over the last couple of years have actually missed out on the fantastic boom that capital cities have had.
\nStrategic investors make educated investment decisions based on research, and they buy a property below its intrinsic value and keep it in the long-term. They add value along the way. They manufacture capital growth by adding value.
\nKevin, there are lots of other lessons, but I think if one pays attention to these ones, it\u2019s going to see you through over the next couple of interesting years because it\u2019s never going to be different, Kevin.
\nKevin<\/b>:\u00a0 Exactly right. Five great lessons there from Michael Yardney. You can read more about Michael, too, at his blog site, PropertyUpdate.com.au.
\nMichael, thanks for your time.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In today’s show\u00a0Michael Yardney, from PropertyUpdate.com.au,\u00a0shares the 4 most dangerous words in property investment.   Transcript: Kevin:\u00a0 I was attracted recently to one of Michael Yardney\u2019s blogs on his blogsite, PropertyUpdate.com.au. It attracted me, and it probably did to you, too \u2013 \u201cThe Four…<\/p>\n","protected":false},"author":176692471,"featured_media":5897,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,13,25],"tags":[101],"class_list":["post-5892","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-latest-story","category-sponsored-channels","tag-podcast"],"yoast_head":"\n4 most dangerous words in property investment - 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\/4-most-dangerous-words-in-property-investment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"4 most dangerous words in property investment - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  In today’s show\u00a0Michael Yardney, from PropertyUpdate.com.au,\u00a0shares the 4 most dangerous words in property investment.   Transcript: Kevin:\u00a0 I was attracted recently to one of Michael Yardney\u2019s blogs on his blogsite, PropertyUpdate.com.au. 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