{"id":7343,"date":"2016-03-15T01:00:02","date_gmt":"2016-03-14T14:00:02","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7343"},"modified":"2016-03-15T01:00:02","modified_gmt":"2016-03-14T14:00:02","slug":"5-must-ask-questions-for-every-property-investors","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/5-must-ask-questions-for-every-property-investors\/","title":{"rendered":"5 Must Ask Questions for every Property Investors – Michael Yardney"},"content":{"rendered":"

 
\nIn today’s show Michael Yardney<\/a><\/strong>,\u00a0from Metropole Property Strategists, tells us about the 5 \u2018must ask\u2019 questions every property investor should ask.
\n <\/p>\n

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

Kevin:\u00a0 <\/b>Choosing to build wealth through residential real estate requires a significant investment. I don\u2019t have to tell you that I\u2019m sure. I\u2019m not only just talking about money, but commitment in time and emotional energy that\u2019s required, as well.
\nIn the beginning, you\u2019ll need to work hard to support the costs associated with property ownership, so it\u2019s understandable that many people suffer buyer\u2019s remorse after making such a monumental purchase. You\u2019re going to come across opposition from friends and family, no doubt, as well.
\nI thought it would be beneficial to go through the five questions that you need to ask yourself \u2013 and answer honestly \u2013 before making your next property purchase. These have been put together by an expert in that field, Michael Yardney, who, no doubt, has had to come across these on many occasions.
\nGood morning, Michael.
\nMichael<\/b>:\u00a0 Good morning, Kevin.
\nKevin<\/b>:\u00a0 Would that be correct?
\nMichael<\/b>:\u00a0 Buyer\u2019s remorse is a normal human emotion, Kevin, and it happens when you spend a large sum of money. It could be when you buy a new set of clothes, a suit, or outfit for a female. It could be if it\u2019s a bigger purchase like a car.
\nEspecially with a property, you tend to go look on the Internet to see if a better one has come around. You think, \u201cHave I paid too much? Is the market going to turn?\u201d
\nYou\u2019re right, Kevin. I think it\u2019s worth preparing yourself for that, and you can do that partly by answering some questions to yourself to make sure you\u2019ve made the right decision.
\nKevin<\/b>:\u00a0 Yes. Most of these questions, which I\u2019ve had the privilege of having a look at, are all self-questioning. What\u2019s the first one, Michael?
\nMichael<\/b>:\u00a0 One of the big questions people ask is what\u2019s going to happen if the market falls? One day, it is going to slow down, and it may fall or stagnate for a period of time. You should already have gone into your purchase with that in your mind and being prepared.
\nSure, we\u2019ve enjoyed some good times in some of our big capital cities last year. This year, we know the market is going to slow down a bit. In due course, it will even correct in some locations. We know property values don\u2019t go up in a straight line.
\nHowever, if you buy the right property in the right location in one of our big capital cities and you bought it at the right value, it doesn\u2019t matter; it\u2019s unlikely the value of your property is going to crash because it will be underpinned by other owner-occupiers in that location buying similar properties, Kevin.
\nKevin<\/b>:\u00a0 The second question, Michael, is one we don\u2019t have much power over unless, of course, we choose to make sure that it\u2019s not going to impact us.
\nMichael<\/b>:\u00a0 Another worry people have is \u201cHow am I going to make my mortgage repayments if interest rates move up?\u201d Sure, interest rates are low at present, and they may even drop a little bit further this year, but in the medium term, as our economy picks up, it\u2019s likely interest rates are going to head north. So it\u2019s important to avoid becoming a statistic and getting caught out when that happens by planning ahead.
\nOne way of doing it is making sure that you can service your loans if interest rates do go up a little bit. Kevin, the other way, of course, is to lock in on one of those attractive fixed interest rates that are available at the moment.
\nKevin<\/b>:\u00a0 Yes. Question number three, Michael.
\nMichael<\/b>:\u00a0 \u201cWhat happens if my employment circumstances change?\u201d We know life is unpredictable, Kevin. Most of us are requiring our personal exertion income to support some of the negative cash flow shortfall. Are you in a steady job? Are you in the position that you could maybe earn some bonuses or see some more clients, patients, or customers to get some more money if you need it?
\nIf you\u2019re not in that position or if you don\u2019t have the stability of a steady job, another way to protect yourself is having sufficient buffers set aside \u2013 that rainy day back-up I like having in \u2013 maybe a loan of credit or an offset account.
\nAlso, protect yourself with things like income protection and life insurance because life has a funny way of getting at you, doesn\u2019t it, Kevin?
\nKevin<\/b>:\u00a0 It certainly does, mate. You mentioned there about \u201cWill my income be able to cover the repayments?\u201d It\u2019s likely that\u2019s not going to be the case, Michael?
\nMichael<\/b>:\u00a0 It is, even in today\u2019s lowish interest rate environment and especially if you\u2019re buying the sort of property that\u2019s going to have strong capital growth. I think one of the mistakes investors make is not fully understanding all their outgoings. They think they\u2019re going to get 3.5%, maybe 4% rental yield, but that\u2019s gross, and when you take into account agents management commissions and rates and taxes and all the other things, in fact, the return is much, much less than that.
\nFirst of all, analyze your property\u2019s cash flow to make sure you can support it, and then check your own household budget to make sure that you have the surplus for it. Don\u2019t count on the negative gearing because it may or may not change. It\u2019s just that that\u2019s cream, so don\u2019t count on the bonus from that, even though I don\u2019t think the laws are going to change. Maybe you make sure you borrow enough by having that cash flow buffer we spoke about a while ago just to buy you some time to see you through the ups and downs in property, Kevin.
\nKevin<\/b>:\u00a0 Yes, mate. The final question puts an interesting twist on a comment that I\u2019ve heard many times and that is that you\u2019ll make money out of real estate when you buy. In other words, that\u2019s indicating that you have to buy below market.
\nMichael<\/b>:\u00a0 That\u2019s one of the big concerns of buyer\u2019s remorse. \u201cHave I paid too much?\u201d That\u2019s, again, a normal human reaction. The only way you can prevent that level of buyer\u2019s remorse is by having done your homework, having done your due diligence, doing all the research, and knowing what\u2019s going on.
\nBut, Kevin, you already hinted at it. No. You don\u2019t make your money when you buy your property by buying cheaply; you make it by buying the right property. Lots of times, I\u2019ve paid full market price — or occasionally even above what I think it is the market price could be — just to secure the right property because you make your money by owning the right property in the right ownership structures at the right location at the right price for the long term.
\nDon\u2019t get upset if the market fluctuates up or down a little bit. You\u2019re going to minimize that if you\u2019ve done your research, done your homework, and made a fair offer. If you can\u2019t get it, just walk away. There will be another deal, Kevin.
\nKevin<\/b>:\u00a0 Yes. They\u2019re five great questions. Go back over them. Have a listen to the interview once again or even read the transcript, which we provide below this interview, as well. They\u2019re questions, Michael, that can act like barometers, can\u2019t they?
\nMichael<\/b>:\u00a0 Yes, they can. We talked about it today in the context of buyer\u2019s remorse, but really, it should have already all been answered before you even buy the property to make sure that you don\u2019t become one of the casualties that occur unfortunately so often when people buy emotionally rather than buying strategically.
\nKevin<\/b>:\u00a0 Always great talking to you. Michael Yardney from Metropole Property Strategists.
\nMichael, thanks for your time.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In today’s show Michael Yardney,\u00a0from Metropole Property Strategists, tells us about the 5 \u2018must ask\u2019 questions every property investor should ask.   Transcript: Kevin:\u00a0 Choosing to build wealth through residential real estate requires a significant investment. I don\u2019t have to tell you that I\u2019m…<\/p>\n","protected":false},"author":176692471,"featured_media":7345,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,17,25],"tags":[101],"class_list":["post-7343","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-property-investment","category-sponsored-channels","tag-podcast"],"yoast_head":"\n5 Must Ask Questions for every Property Investors - 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\/5-must-ask-questions-for-every-property-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"5 Must Ask Questions for every Property Investors - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  In today’s show Michael Yardney,\u00a0from Metropole Property Strategists, tells us about the 5 \u2018must ask\u2019 questions every property investor should ask.   Transcript: Kevin:\u00a0 Choosing to build wealth through residential real estate requires a significant investment. 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