{"id":7891,"date":"2016-05-10T01:00:13","date_gmt":"2016-05-09T15:00:13","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7891"},"modified":"2016-05-10T01:00:13","modified_gmt":"2016-05-09T15:00:13","slug":"investment-tips-to-ignore","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/investment-tips-to-ignore\/","title":{"rendered":"Investment tips to ignore"},"content":{"rendered":"

 
\nMichael Yardney<\/a> shares his top 7 property investment tips you should ignore.<\/strong>
\nTranscript:<\/strong>
\nKevin:<\/b>\u00a0 As investors, it can be very hard to separate the good property advice from the bad. We\u2019ve quite often talked about this. Let\u2019s be honest about it.
\nThere is a lot of advice out there. Most of what you hear, of course, on Real Estate Talk is going to be okay, but by the same token, we have to filter through it. I\u2019ve asked Michael Yardney<\/a>\u00a0of Metropole Property Strategists<\/a> to join me.
\nLet\u2019s have a look at some of the advice, Michael, that maybe you\u2019d ignore and you might suggest we do the same. Good morning.
\nMichael:<\/b>\u00a0 Good morning, Kevin. Yes, there is lots of advice to sort through, to sift through, to filter, and sometimes it is very hard to decide what you should follow.
\nKevin:<\/b>\u00a0 What about buy locally so you can visit the property?
\nMichael:<\/b>\u00a0 A lot of people say that, don\u2019t they? You should be able to look at it, you should be able to go past it, you should drive past it. It\u2019s your comfort zone. I can understand the appeal of it, but as the basis of an investment strategy, in my mind, there are lots of potential dangers.
\nRemember there are lots of different markets around Australia. They all have different growth drivers, different growth cycles, so investment based on just location is important, but not necessarily your location.
\nKevin:<\/b>\u00a0 Yes, you could also be missing out on a lot of great opportunities, as well.
\nMichael:<\/b>\u00a0 The markets are so fragmented, that\u2019s exactly what is happening.
\nKevin:<\/b>\u00a0 What about just searching for high yield opportunities?
\nMichael:<\/b>\u00a0 We know that there are the two big schools. Some suggest strong cash flow is a great way for investors to go, but in my mind, it\u2019ll never make you rich. There is no way. Cash flow from high-yielding properties, sure, they help you manage your investments, they help your cash flow. But in my mind, it\u2019s capital growth that you require to build your asset base, to build your net worth, and then you transition to the cash flow stage.
\nKevin:<\/b>\u00a0 The next one on the list you gave me, I must admit I pondered over for a while, and that is about investing in the United States because it is so cheap, isn\u2019t it?
\nMichael:<\/b>\u00a0 It is. I can think of now probably for 15 years, people have been suggesting investing in the United States because it\u2019s cheap. You can buy a house cheaper than the price of a used car. But I guess you could find those places now in Whyalla or in Moranbah in Australia, as well. There are always cheap properties out there, Kevin.
\nKevin:<\/b>\u00a0 That\u2019s very true, actually. That\u2019s good advice. This next one is a good one. Only invest in properties that you\u2019d live in yourself. I think this is a real big mistake.
\nMichael:<\/b>\u00a0 Very much so, and so many people fall for that. The goal is to take your emotions out of the equation by looking at properties that suit that particular market. In some areas, a one-bedroom property is appropriate, and in other areas, it may not be. In some areas, apartments; maybe in other areas, it\u2019s really house and land. I\u2019ve owned many well-performing properties that are consistently tenanted, but I wouldn\u2019t live in them myself.
\nKevin:<\/b>\u00a0 No. What about investing just to take advantage of tax deductions?
\nMichael:<\/b>\u00a0 That\u2019s another piece of advice you should ignore. You should never invest in a particular property because of the tax benefits \u2013 depreciation, negative gearing, rental guarantees. You\u2019re leaving yourself exposed to changes in the tax rules. We just talked about that in previous shows \u2013 about negative gearing. But the main thing is your property should be a growth asset and the tax benefits are really the cream on the top.
\nKevin:<\/b>\u00a0 A lot of people do think that investors are only investors because of things like negative gearing, Michael.
\nMichael:<\/b>\u00a0 That\u2019s not really the case. I know that is a strategy that some people talk about, and what we\u2019re saying right now is that it\u2019s the sort of advice that\u2019s fraught with danger.
\nKevin:<\/b>\u00a0 Absolutely. This next one: buy a holiday home that you can personally benefit from. By this, you mean that you\u2019re going to use yourself?
\nMichael:<\/b>\u00a0 A lot of people buy a holiday home and use the excuse that \u201cIt\u2019s also an investment but I can actually go there along the way. I can use it as holiday time with my family and get two benefits out of it.\u201d I think along similar lines is \u201cI buy this property because maybe in ten years\u2019 time, I\u2019m going to retire into it.\u201d
\nI think having these mixed uses means it\u2019s never going to be a particularly good holiday home and probably not a good investment. I\u2019d be just using a specific purpose for your property. Have it as an investment. Holiday locations don\u2019t usually make good capital-growth locations. Instead, stay at a new holiday location each year or take a week\u2019s vacation in the best hotel in that area.
\nKevin:<\/b>\u00a0 I can hear the chorus of listeners now saying, \u201cOh yes, I fell for that one.\u201d
\nMichael:<\/b>\u00a0 It\u2019s so common. Again, we\u2019re human and have emotions and needs. We\u2019ve all made these mistakes. That\u2019s why I know these lessons. I\u2019ve made a lot of them myself.
\nKevin:<\/b>\u00a0 I\u2019m so pleased this next one is on the list because time after time, I still hear about people who are buying off-the-plan because they think they\u2019re going to buy at today\u2019s prices to get tomorrow\u2019s benefit.
\nMichael:<\/b>\u00a0 We\u2019re talking about the investment tips you should ignore. That is one that if you buy off-the-plan, you\u2019re buying at today\u2019s price. But in fact, it\u2019s not today\u2019s retail price. There are two tiers in the property investment market, and off-the-plan prices are not set by the market; they\u2019re set by the developer, often for as much as he can get based on \u2013 often \u2013 what overseas buyers are going to pay. Therefore, the real test of a property\u2019s value is when it comes onto the secondary market.
\nKevin, recently, we\u2019ve been seeing a lot of properties being sold a year or two after contracts have exchanged at up to 30% below the contract price. You can\u2019t forecast future growth. There are too many risks in off-the-plan. In my mind, that\u2019s a bad piece of advice to listen to.
\nKevin:<\/b>\u00a0 Those are seven pieces of advice that you shouldn\u2019t listen to. I guess that list could go on and on. You could probably write a book about this one. In fact, that\u2019s a good idea.
\nMichael:<\/b>\u00a0 It is. All of the mistakes people make and the bits of advice not to take \u2013 Kevin, I could easily fill a book with that.
\nKevin:<\/b>\u00a0 I\u2019m sure you could. Michael, always great talking to you. Thanks for your time.
\nMichael:<\/b>\u00a0 Thanks, Kevin.
\n\u00a0<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

  Michael Yardney shares his top 7 property investment tips you should ignore. Transcript: Kevin:\u00a0 As investors, it can be very hard to separate the good property advice from the bad. We\u2019ve quite often talked about this. Let\u2019s be honest about it. There is a…<\/p>\n","protected":false},"author":176692471,"featured_media":7894,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36],"tags":[101],"class_list":["post-7891","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","tag-podcast"],"yoast_head":"\nInvestment tips to ignore - 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\/investment-tips-to-ignore\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Investment tips to ignore - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  Michael Yardney shares his top 7 property investment tips you should ignore. 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