{"id":8353,"date":"2016-06-30T01:00:20","date_gmt":"2016-06-29T15:00:20","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8353"},"modified":"2016-06-30T01:00:20","modified_gmt":"2016-06-29T15:00:20","slug":"why-property-investors-fail-part-2","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/why-property-investors-fail-part-2\/","title":{"rendered":"Why property investors fail – Part 2 – Michael Yardney"},"content":{"rendered":"

 
\nFifty percent of those who buy an investment property sell up in the first 5 years. Put another way – most Australians who get into property investment never achieve the financial freedom they aspire to, and worse still many property investors lose a heap of money and lost opportunities along the way.\u00a0Michael Yardney<\/strong> <\/a>shares some thoughts on how not to fall into that category.
\n <\/p>\n

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

Kevin<\/b>:\u00a0 And coming back with the final five common investor concerns that Michael Yardney and his team have found in talking to investors for many, many years. We\u2019re going to touch on the last five.
\nLet\u2019s have a look at the first few, Michael. You shared with us that number one was poor property selection, number two was poor cash flow management, also wrong ownership structure, running out of time. That\u2019s a terrible feeling \u2013 the feeling that they have missed the boat. Then the final one that you gave us earlier in the show was off-the-plan woes.
\nI guess that leads us to the next one, doesn\u2019t it, about hype in the market, Michael?
\nMichael<\/b>:\u00a0 Yes, Kevin. Many unfortunate investors bought the wrong property because they looked for the next hot spot. While some enjoyed some short-term capital growth, since then, property values in all of these so-called hot spots as well as rentals have actually dropped considerably, and unfortunately, we\u2019re seeing a lot of investors with negative equity. In other words, their loans are more than the value of their properties, especially those who bought in mining towns.
\nMany of Australia\u2019s worst performing property markets over the last couple of years have really mirrored these mining towns that have gone up and down, and investors have been burned by those hot spotters who recommended them.
\nKevin<\/b>:\u00a0 Yes, that\u2019s certainly one to watch out for. What was number eight, Michael?
\nMichael<\/b>:\u00a0 Some investors didn\u2019t maximize their tax position because they hadn\u2019t obtained a depreciation report. Depreciation deductions can make a real difference for investors by helping them reduce their taxable income. Again, it\u2019s not a reason to invest, but it\u2019s nice cream on top of your other rewards, Kevin.
\nKevin<\/b>:\u00a0 Yes, it is indeed. And if you are confused, of course, you can always talk to our good friends at BMT Tax Depreciation.
\nMichael<\/b>:\u00a0 Well, Kevin, can I say that just recently, I\u2019ve organized another depreciation schedule on one of my properties and I did it online through BMT, and gee, do they make it easy. I\u2019d definitely recommend that, too.
\nKevin<\/b>:\u00a0 Yes, indeed, and you can get on to them through the link on Real Estate Talk, of course.
\nMoving on to the next one, number nine, Michael?
\nMichael<\/b>:\u00a0 Another regular concern I\u2019ve had is people who have tried to save money by using a cheap property manager, or, Kevin, worse still, managing their own properties and running into trouble.
\nGood business owners \u2013 and that\u2019s what you have to be as a property investor \u2013 recognize they can\u2019t do it all themselves. They hire a good team of professionals around them, and that includes a professional property manager. Anyone can collect rents; it\u2019s when things go wrong that you need a good professional property manager on your side.
\nKevin<\/b>:\u00a0 I\u2019ve always found it\u2019s great to have that arm\u2019s length relationship. Just to have someone in the middle there, Michael, so that you\u2019re not dealing with the tenants yourself.
\nMichael<\/b>:\u00a0 Definitely. The legislation is too complicated. It\u2019s too hard to do it on your own. It\u2019s a false saving, Kevin.
\nKevin<\/b>:\u00a0 Yes, and of course, many investors go across borders, as well, and the rules do change state to state, as well, so you just have to be very, very careful.
\nGee, we\u2019re up to number ten.
\nMichael<\/b>:\u00a0 Another concern is that the Internet is currently littered with stories of investors who have succumbed to a lot of the properties spruikers\u2019 tactics. They went to a seminar and they got pressured by high sales tactics. You rush to the back of the room and make a decision and sign the contract now, and if you do, you\u2019re going to get a discount on buying this property.
\nThey\u2019re buying off stock lists. At people\u2019s seminars, they have this list of properties to sell. Sure, they can be claims of strong capital growth and no money down, but similarly, people got a bit taken by project marketers who are working for the developer and lost out because the advice they received was far from independent, Kevin.
\nKevin<\/b>:\u00a0 And the final one, Michael?
\nMichael<\/b>:\u00a0 I guess we\u2019ve mentioned it a couple of times, but it\u2019s the concern that they didn\u2019t build a good team around themselves early enough. These investors realized that they didn\u2019t get the maximum out of their properties, so I\u2019d be recommending that you get a good network early in your investment career. That includes a good finance broker, a smart solicitor, a property-savvy accountant, and a knowledgeable property strategist.
\nKevin<\/b>:\u00a0 Yes. Just to recap, in this little segment, Michael has shared with us the 11 common investor concerns in the show this week that he and his team have gleaned and put together from all of the people they\u2019ve spoken to for many, many years.
\nJust to recap on this little portion, they believe the hype, the confusion about depreciation, property management problems, getting caught out by spruikers, and the final point you just made, Michael, about putting a great team together.
\nAt this point, too, it\u2019s always good to mention that if you really do want to get a great team together, you could probably do a lot worse than start with talking to Metropole Property Strategists.
\nMichael<\/b>:\u00a0 Thanks, Kevin. I guess in summary, I often say, \u201cProperty investment is simple, but it\u2019s not easy,\u201d and that\u2019s really not a play on words. If you follow the formula, it works, and if you try and be smart and miss steps along the way, you could up end up failing.
\nKevin<\/b>:\u00a0 You could, indeed. Michael, great sharing some knowledge with you. Thank you very much for that. Your extended exposure today in the show was very, very welcome. Thanks for your time.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Fifty percent of those who buy an investment property sell up in the first 5 years. 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