{"id":6303,"date":"2015-11-11T01:00:14","date_gmt":"2015-11-10T14:00:14","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6303"},"modified":"2015-11-11T01:00:14","modified_gmt":"2015-11-10T14:00:14","slug":"follow-the-path-less-travelled","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/follow-the-path-less-travelled\/","title":{"rendered":"Follow the path less travelled – Damien Collins"},"content":{"rendered":"

 
\nIn today’s show we hear from Damien Collins,\u00a0<\/strong>from Momentum Wealth in Western Australia, why you should not just follow the sheep but instead blaze your own investment trail or at least follow the path less travelled.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 At a time when there are stark differences in the performance of various property markets around Australia, investors need to remain very level-headed. Many people, in fact, are too easily swayed and they just simply follow what everyone else is doing \u2013 a bit like herd mentality.
\nDamian Collins from Momentum Wealth in WA joins us.
\nHi Damian.
\nDamian<\/b>:\u00a0 Hi Kevin. How are you going?
\nKevin<\/b>:\u00a0 Good mate. Do you see this quite often, people just willing to follow what everyone else is doing instead of trying to plot their own course?
\nDamian<\/b>:\u00a0 Definitely, we do see that, Kevin. It\u2019s been a human trait that\u2019s been around for a long, long time, and I don\u2019t see it changing anytime soon. What we\u2019re seeing, as you would know, in Sydney and Melbourne over the last 12 months, 18 months, particularly in Sydney, is when everyone else is getting in, the rest of the herd jump in.
\nYou see on the other side of the scale, good buying opportunities in other locations and because no one else is buying, people think it must not be a good time. We\u2019ve end up seeing the weight <\/b>of money go perhaps into overheated markets. We saw it in the Pilbara in Western Australia years ago when people were paying $1.3 million for properties, and now sadly some of those are worth less than half that and their rents are down 70%.
\nKevin<\/b>:\u00a0 Yes. It\u2019s a bit like comfort in numbers, but there must be a strategy to all of this. How can we overcome that and be sure that we\u2019re moving in the right direction, Damian?
\nDamian<\/b>:\u00a0 Really, you have to go back to fundamentals and not look at what\u2019s happening in the paper and what\u2019s happening next week. It\u2019s looking over a five- or ten-year horizon. There\u2019s always the thing I refer to as mean reversion. It basically means if a market outperforms too long and too much in too short a time, it inevitably comes back to the norm.
\nWe\u2019ve seen that before. When Sydney had its last big run up in 2001 to 2003, for the seven years thereafter, it barely did capital growth at the rate of inflation. We also saw the same in the Perth market \u2013 overshot 2003 to 2007, then had a long period there where it underperformed. The Pilbara, as I was saying before, a similar sort of thing.
\nMean reversion: property can still grow strongly, but if it has a big period of short-term outperformance, it comes back. You have to look and say, \u201cWhere\u2019s the market been?\u201d If it\u2019s had a big, strong run-up already, the likelihood is that it\u2019s far less likely to do that in the near future rather than the more likely. Yet most people think \u201cIt\u2019s gone up so much so quickly; it\u2019s going to keep doing it.\u201d Well, it doesn\u2019t work that way.
\nKevin<\/b>:\u00a0 The market is cyclical, of course, but you certainly have to become a student of it. I think that\u2019s even more so nowadays, Damian. I remember 10 to 20 years ago, investing in property and it was pretty forgiving, really. If you made a mistake, you could always pick it up somewhere else, but nowadays the losses can be quite enormous, as you mentioned earlier.
\nDamian<\/b>:\u00a0 Definitely, Kevin. We\u2019re not in that environment that we were in the 1980s and even into the 1990s where your inflation was much higher, wage growth was much higher. Property prices would inevitably go up 8% and sometimes more on average per year.
\nThe likelihood of all properties going up 8% per annum into perpetuity is far less likely just because our wage growth is 3% and inflation is at two and a bit percent now. People just can\u2019t keep paying that 8% growth rate. What you\u2019ll see is, I think, average property prices in most cities be close to that 4% to 5%, but within those cities, you still might find pockets and individual properties that do towards that 7% or 8%.
\nBut you\u2019re exactly right. The market\u2019s not forgiving anymore. It\u2019s not always going to continue to outperform and grow strongly, so it\u2019s really about property selection, due diligence, homework, and finding that location that\u2019s got the best potentials for the next five to ten years.
\nKevin<\/b>:\u00a0 I think it can be all summed up in a line I think you used in a blog sometime ago: \u201cDon\u2019t be a sheep; be a shepherd.\u201d
\nDamian<\/b>:\u00a0 Yes, definitely. Unfortunately, you\u2019ll find 90% of investors follow the herd and are the sheep. It\u2019s not just the property market, Kevin. I\u2019ve seen it in the share markets. Warren Buffet\u00a0 \u2013 one of the most successful investors in the world \u2013 buys counter-cyclically.
\nThat\u2019s how you make good money in property. You still have to have an area that has good long-term fundamentals \u2013 don\u2019t just buy because it\u2019s cheap \u2013 but if you buy the right area at the right time in the cycle, there is plenty of profit still to be made.
\nKevin<\/b>:\u00a0 Damian, thanks so much for your time, mate.
\nDamian<\/b>:\u00a0 Pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In today’s show we hear from Damien Collins,\u00a0from Momentum Wealth in Western Australia, why you should not just follow the sheep but instead blaze your own investment trail or at least follow the path less travelled.   Transcript: Kevin:\u00a0 At a time when there…<\/p>\n","protected":false},"author":176692471,"featured_media":6304,"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-6303","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":"\nFollow the path less travelled - Damien Collins - 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\/follow-the-path-less-travelled\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Follow the path less travelled - 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