{"id":8829,"date":"2016-08-10T01:00:16","date_gmt":"2016-08-09T15:00:16","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8829"},"modified":"2016-08-10T01:00:16","modified_gmt":"2016-08-09T15:00:16","slug":"margaret-opens-up","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/margaret-opens-up\/","title":{"rendered":"MARGARET LOMAS opens up"},"content":{"rendered":"

 
\nIn our feature interview this week, we catch up with Margaret Lomas<\/strong> and peel back the layers to find out her personal views on property investment. You will hear Margaret talk candidly about the mistakes she has made, her best and worst investment and why she is so passionate about helping others.
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Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 Margaret, tell me why did you first got involved in property investment?
\nMargaret:<\/b>\u00a0 Like most people, we were in the position where we\u2019d worked as hard as we could to pay down some of our own home mortgage. Although I had owned some property since I was 20 \u2013 I\u2019d bought my first unit with my first husband when I was 20 \u2013 we, like most people of that era, had bought and sold two or three times and never really came out of it with much. When I got together with my second husband, we built a house and were really diligent in being able to pay it down. We\u2019d learned a fair bit about mortgage reduction at that time, which was fairly new back in the late \u201980s, and had paid some money off our home and just wanted to get ahead.
\nBack in that day and age, the only thing that had ever been written about property investment was Jan Somers\u2019 book \u201cBuilding Wealth Through Investment Property.\u201d I actually got hold of a copy of that \u2013 I think a friend may have given it to me \u2013 read it, and thought, \u201cThat\u2019s something I can do, and that\u2019s a way we can improve our situation and get ahead.\u201d
\nKevin:<\/b>\u00a0 Do you remember some of the early lessons out of that book from Jan?
\nMargaret:<\/b>\u00a0 I don\u2019t actually remember a lot about the book, to be honest. I just remember that it gave me a desire to buy. A lot of the things that she actually advocated I don\u2019t necessarily agree with these days. But it was appropriate for the time and place that the book was written. Her book focused very much on the physicality of property, really. It focused on buying median priced property in good suburbs and just sitting on them. It didn\u2019t really talk about things like taxation impact.
\nIt didn\u2019t talk about all the things that I believe in today, which is that in some areas, you want to buy below the median, that there\u2019s a big relationship between the income people get and what they can afford, and therefore that helps you to work out what\u2019s going to happen to growth. There\u2019s a whole lot of things the book didn\u2019t cover, but what it did do is it more or less said, providing you stick to some certain rules, you can buy a property and in 20 years time, you can have enough money to retire on. That\u2019s really what I was after \u2013 just the end goal. It gave me that end goal, if it didn\u2019t give me the strategy.
\nKevin:<\/b>\u00a0 Yeah, it gave you the motivation. You mentioned there about the first property you purchased with your first husband, tell us about that. What do you remember about that one?
\nMargaret:<\/b>\u00a0 The very first property I bought with my first husband was a unit to live in. We bought that in Cabramatta, in Sydney, which even back then, was getting quite a different mix of cultures. But, for a period of time, the entire suburb actually became a suburb where if you didn\u2019t speak or read Vietnamese, you didn\u2019t even know what the shops were for. Everything was written in Vietnamese at the time.
\nWe managed to get in there at a fairly cheap price. I think we paid $29,000 for a one-bedroom unit there. We sold it three years later for about $34,000 or $35,000. But we really didn\u2019t have a clue what we were doing. We knew nothing about real estate, like all young people at the time. I\u2019m certain that even at $28,000, we probably overpaid for it. We wouldn\u2019t have known how to negotiate. We wouldn\u2019t have had anyone in our lives who knew how to negotiate with us. People just didn\u2019t really understand real estate or even understand what we were doing in terms of borrowing.
\nOur first loan came from a building society, because I worked for Westpac and they wouldn\u2019t give me a loan until I\u2019d worked with them for five years. That was typical back then. It was very hard to get money. A local building society did give us the money to buy it. It was repaid via coupon. One day a month, I\u2019d go down the road from where I worked, get out my coupon, and pay my $308 a month. We didn\u2019t know anything. We didn\u2019t know how mortgages worked. I don\u2019t think we even knew what interest rate we were paying.
\nI guess from that perspective, we bought a house purely because we thought it was the right thing to do, and we thought we had to. But we didn\u2019t buy it with any sense or with any real purpose to be able get a foot on the property ladder. It was just to have a place to live, more than anything else.
\nKevin:<\/b>\u00a0 A very familiar story. It sounds very much like our story, too. The first home we ever got was from a building society. Do you remember what year that was, Margaret?
\nMargaret:<\/b>\u00a0 I should be able to. I came back from overseas \u2013 I was an exchange student for a year \u2013 in \u201979, and I met my ex-husband, basically, the day after I got back. We decided to get married straight away. It was my dad who pushed us. We\u2019d saved about $2,000, and he said, \u201cI\u2019ll give you $2,000 as well, and you should buy a house.\u201d That would have been either the very end of 1980 or the very beginning of 1981.
\nKevin:<\/b>\u00a0 Interesting to hear that your dad prompted you to do that. Do you think that\u2019s the case with a lot of investors, that they get a good example from their parents?
\nMargaret:<\/b>\u00a0 Yeah. Look, some people get a good example from their parents and some people get a really bad example from their parents, as well. In hindsight, my dad was always very good at motivating me toward doing things, mostly because he always had very high expectations of me right through until the day he died.
\nOut of his five children, I was the one who probably had the most pressure from him, but also rose to that pressure and had the highest expectations placed on me, for no particular reason. I was the fourth out of five children, so it\u2019s not like I was the first or the last or anything. I think it was just that he and I were very alike personality-wise, and therefore he saw something in me. We had a very close relationship.
\nI do recall him having the conversation with us \u2013 in exactly the same way as I\u2019ve had the conversation with my own now-married daughter \u2013 and saying, \u201cLook, however you can do it, just get started. Get in there and get some property. It doesn\u2019t matter what it is, it just matters that you get it.\u201d
\nI can\u2019t say that buying that property launched me into anything \u2013 because it didn\u2019t. We sold that one-bedroom unit and bought a three-bedroom townhouse in Macquarie Fields, which is a pretty dodgy area. Then we sold that when we moved to Perth.
\nWe moved to Perth searching \u2013 I guess in some ways \u2013 for the Great Australian Dream. It was much cheaper in Perth at the time, which is hard to believe now, but it was cheap as chips to build fabulous properties in Perth at the time. We sold the townhouse for $38,000 to spend $52,000 on a four-bedroom house in a pretty good suburb in Perth. I came out of all of that \u2013 which we\u2019ll probably get to in a minute \u2013 still with nothing at the end of those three property purchases. I think that was more about us. Like I said, we bought because we thought it was the right thing to do, because it was the Great Australian Dream, but none of us knew how to do it in such a way that it actually resulted in anything other than giving us a roof over our heads.
\nKevin:<\/b>\u00a0 That\u2019s what we saw in those days, too. We bought properties to live in and we always knew they were going to be a good investment, because there was a very good chance you\u2019d sell it for some kind of a profit. How many houses did you actually buy and sell before you realized that this might be a way to put together a good wealth portfolio?
\nMargaret:<\/b>\u00a0 I\u2019d bought the unit with my ex, then we sold that and bought the townhouse. Then we sold the townhouse and built a house in Perth. We moved to Perth for two reasons. My ex-husband was an aircraft welder and there were only two places in Australia that did the kind of work he did, and he was offered a job that paid him $100 a week more in Perth \u2013 which was a huge amount of money back then. And because we just didn\u2019t seem to be able to get up the ladder any further in Sydney, even back then.
\nThe story\u2019s always been the same. Sydney\u2019s always been over-heated. People say there\u2019s frenzy, but it\u2019s always been the same \u2013 except just after I\u2019ve sold property: then there\u2019s always been a big boom when I\u2019m not in the market any more. We sold the one in Macquarie Fields to build the one in Perth when we moved over there, and we did have a far better standard of living there.
\nWhen we divorced, I bought that off him. Interestingly enough, I bought his half out at the peak of the market, and it was valued by the bank who gave me a really bad loan at the time \u2013 one of those loans for low-income earners that just goes backwards because you don\u2019t even meet the interest on it. You just pay 27% of your income, and it went backwards.
\nIt was a combined problem of\u2026 By the time I met my new husband and then we decided that we wanted to do something together, we needed to sell my house \u2013 because it was my former marital home, and there was a lot of reasons around wanting to sell it. When we sold it, we sold it for roughly $15,000 less than the value that I\u2019d bought the other half on.
\nAnd because the loan had also gone up, I came out of that property owing $2,000. That\u2019s what I always thought made my new husband a perfect match for me \u2013 because he had $2,000. We were a perfect financial match. His $2,000 paid my debt. We were clean and clear and zero \u2013 sitting at zero. We basically had nothing at that point in time.
\nKevin:<\/b>\u00a0 Great learning experience though, isn\u2019t it? It drives you on to greater things.
\nMargaret:<\/b>\u00a0 Yes. I was 31 at the time, when we sold that last house, and my new husband would have been 22 or 23. We had nothing. We started with zero. But certainly together, I had the experience and he had a lot of smarts, and together we were just ready to go and make something happen.
\nKevin:<\/b>\u00a0 Based on all of that experience \u2013 there\u2019s a wealth of experience there, and I want to talk to you more about what you\u2019re doing now, too \u2013 but just going back on that and the lessons you learned: if someone was starting in property investing today, what would be your advice to them?
\nMargaret:<\/b>\u00a0 Although I believe that in life you\u2019ve basically got to hold your breath and jump right in, I think that can be the worst thing you do in property investing \u2013 just like I did when I was 20 or 21. Had I had the resources available that people have today, then what I should have done is actually become educated first. Obviously, I couldn\u2019t do it because the resources weren\u2019t available, but they certainly are today.
\nI always use the analogy that if you wanted to be a doctor or a surgeon, for example, the first thing you do wouldn\u2019t be an appendectomy on your mate. You wouldn\u2019t go and operate on a friend just to see whether or not you were good at it. You\u2019d go to college for seven years first, then you\u2019d do the appendectomy.
\nBut when property investors invest, they jump in and they buy, just because we have this false notion. Because we\u2019re a nation of property buyers and property lovers, we have a notion that we\u2019re going to be somehow innately good at it and we\u2019re going to get it right. Then, I see the fallout in my job now, where I get investor after investor after investor who has epically failed with their first property investment \u2013 and an epic failure can set you back so far it\u2019s not funny.
\nWith the exception of the odd one or two where the person really was badly ripped off by a dodgy spruiker \u2013 and even that\u2019s avoidable I think \u2013 in almost every case of epic failure you can trace the failure back to investor mistake. It\u2019s got nothing to do with the property.
\nKevin:\u00a0 <\/b>Do you think we\u2019ve been spoiled over the decades that property in Australia really has been quite easy to invest in? Even buying our own home, if you added it up, even though we walked out of it seemingly with a profit, it probably wasn\u2019t as good a profit as we should have achieved?<\/b>
\nMargaret:<\/b>\u00a0 Oh, no. It rarely is, though. This is the thing. It\u2019s no wonder the shares and property debate rages. This going to seem like an odd thing for someone who\u2019s a property investment expert and a property lover to say, but in reality, the average property investment the average investor makes actually reaches the end of their investment period with a return that\u2019s probably not as good as they would have got had they just put their money in the bank or put it in a term deposit.
\nKevin:<\/b>\u00a0 Is it because they don\u2019t do the real figures behind it?
\nMargaret:<\/b>\u00a0 Well, it\u2019s not because they don\u2019t do the real figures; it\u2019s because they don\u2019t buy well. They don\u2019t buy properly. People will buy an apartment in Cairns because there\u2019s a great glossy brochure that tells them how fabulous it\u2019s going to be. Then, 15 years later when it hasn\u2019t grown, they wonder why. What\u2019s gone wrong? They\u2019ll say, \u201cOh, it\u2019s because property is lousy.\u201d It\u2019s not. It\u2019s because you were a lousy investor. Blind Freddy could have seen you should never have bought that investment in the first place.
\nI firmly believe that you can improve your property investing to the point where investing in property is better than other investments that you can make. But it\u2019s not universal. All property is not a fabulous investment. I\u2019d even go so far as to say that, more often than not, it\u2019s not. But that doesn\u2019t mean that you can\u2019t succeed at property investing and do a stellar job with your investing.
\nKevin:<\/b>\u00a0 Let\u2019s talk about present day now, about some of the strategies you\u2019re using nowadays to continue to build a very healthy property portfolio, Margaret.
\nMargaret:<\/b>\u00a0 My strategies change all the time \u2013 let me get clear about that. I think that\u2019s a good thing, not a bad thing. It\u2019s not that I turn around and go, \u201cOh my gosh, I was wrong.\u201d It\u2019s that I turn around and go, \u201cWell, the advice that I gave them, which was well and appropriate for 1990, is no longer appropriate in 2014 because everything\u2019s changed about investing.\u201d Everything changes all the time, and you need to be one step ahead of those changes all of the time.
\nI get things wrong, too. I didn\u2019t really see the Sydney market boom coming. Although, having said that \u2013 and I was writing an article about that this morning \u2013 I think if you slice out the last year in the Sydney market, it\u2019s been spectacular. But when we get 20 years down the track and we look back at any ten-year measurement period, we\u2019ll still find that Sydney probably only had the same performance as most of the country. It\u2019s just that it\u2019s in its heyday right now.
\nBy the time this present buyer frenzy goes away \u2013 and 2014 will be Brisbane, I\u2019d say, and 2015 will be Melbourne \u2013 but when you take them all together and you slice a ten-year period out they\u2019re all going to have similar performances, because they all have the same kind of growth drivers, really.
\nWhat I\u2019m saying today is be aware that a buyer frenzy is actually very dangerous for you. If you sit around and continually wait to hear where the hotspots are from other people, or you don\u2019t take action until you suddenly think, \u201cMy gosh, if I don\u2019t buy now it\u2019s all going to be unaffordable and I\u2019ll miss out,\u201d then if that\u2019s your attitude, then you\u2019re going to be buying badly all the time. The attitude has to be \u2013 and this is the same for any investment \u2013 you buy when no one else is buying and you hold for the long term.
\nKevin:<\/b>\u00a0 You have a long-term strategy?
\nMargaret:<\/b>\u00a0 I do have a long-term strategy, because I think that this country is not yet at that point where it\u2019s got adequate capacity to be able to reward short-term property investors, because of the capital gains tax we pay when we flip properties. People think, \u201cI\u2019ll buy property and do it up, and then I\u2019ll flip it and do it again and again.\u201d I know a lot of people who have done that over and over again, and when they come to the end of ten years, they\u2019re not really that better off than if they\u2019d just sat on them. In fact, they\u2019re often worse off because of capital gains tax.
\nUnless you\u2019ve got that time to really devote yourself full-time to the job, where you can be out and about and really hunting down the really super under-valued bargains, and you\u2019ve got your finger on the pulse in terms of cheap tradespeople who can come in and do these quick makeovers, and then you sell them, and you keep doing it over and over again, then it\u2019s not a property investing strategy that I support for the average everyday person who has a real life and a real job and just can\u2019t afford the time to be doing that.
\nKevin:<\/b>\u00a0 Margaret, how often are you reviewing your property portfolio?
\nMargaret:<\/b>\u00a0 All of the time \u2013 but then I\u2019m fortunate in that my job is about property. I\u2019m pretty much always looking at the areas where I own property. I buy property in my own hotspots, so I\u2019m always looking at them, I guess. I review the portfolio all the time, and I do sell. People think I never sell just because I have a \u201cbuy and hold\u201d strategy. But a \u201cbuy and hold\u201d strategy is different to a \u201cbuy and never, ever sell\u201d strategy.
\nA buy and hold strategy is where you buy property with the intention of holding it for the long term, but as you review that strategy, if you find out that you\u2019ve stuffed up a few times, then you might find that you need to divest yourself of the stuff-ups. I\u2019ve done that. I\u2019ve divested myself of a few stuff-ups over time. I\u2019ve kept a couple, as well, just to remind me of how stupid one can be when they get emotional.
\nKevin:<\/b>\u00a0 Which is the one you\u2019ve kept that probably has you the best lesson?
\nMargaret:<\/b>\u00a0 Definitely my first one, which was Cairns. It taught me so many lessons. First of all, it taught me that when you are na\u00efve and you don\u2019t know what you\u2019re doing, don\u2019t buy. When you\u2019re a new investor, don\u2019t hold your breath and jump right in.
\nIt taught me that men in brown suits never tell you the truth \u2013 and if they come into your home with glossy brochures, never sign anything.
\nIt taught me that every story has two sides. If someone gives you all of this fabulous information about an area, you can research it and probably find corresponding bad information about that same area. For example, I was told that 12,000-odd people a year move into Cairns \u2013 which was true at the time, but 14,000 moved out. It was a truth, but it was an untruth.
\nKevin:<\/b>\u00a0 It\u2019s only half the truth.
\nMargaret:<\/b>\u00a0 It\u2019s only half the truth \u2013 and it\u2019s certainly not the half I needed to know at the time. I learned from that that nothing can ever replace good old fashioned research of your own. But I also did learn that you can buy away from home without looking at it without it killing you. I\u2019ve still never seen that property, ever. I\u2019ve had that one now for 14 years, and never seen it. I\u2019m pretty sure it\u2019s still there.
\nKevin:<\/b>\u00a0 That\u2019s the one in Cairns?
\nMargaret:<\/b>\u00a0 Yes. It was interesting, because even though it was our first property, we didn\u2019t have that difficulty that a lot of first-time investors have in buying sight-unseen. That\u2019s never presented a problem to us. We\u2019ve always been able to do that quite easily. I think that\u2019s an investor strength, being able to do that.
\nKevin:<\/b>\u00a0 Is it to do with removing yourself emotionally from that, so that you can look at it that way?
\nMargaret:<\/b>\u00a0 It is, but not necessarily for all the reasons people think. It is to remove yourself emotionally, but there are a lot of reasons you have to remove yourself emotionally. It\u2019s not just because you may fall in love with what is otherwise not a good investment \u2013 in looking at a property you might think, \u201cThis is fabulous,\u201d then not do the right kind of research to see whether that fabulousness is backed up by any real data and information.
\nBut, the reverse is also true. You may hate something that is a fabulous investment, just because it doesn\u2019t look good. I learned that when I visited the properties we had bought in Elizabeth. I went and visited them about six months after we settled, much to my husband\u2019s disgust. He said, \u201cDon\u2019t go, don\u2019t go,\u201d and I did \u2013 and I hated them when I saw them. I was mortified that I\u2019d bought these properties, and they\u2019ve been great. They\u2019ve doubled in value and doubled in their rent return in the time that I\u2019ve had them. They\u2019re still cheap now. They\u2019re still not much of a property, but they\u2019ve doubled. If you can do that all the time, that\u2019s great. But if I had have looked at those before I bought them, there\u2019s no way I would have bought them.
\nKevin:<\/b>\u00a0 Good lesson, isn\u2019t it? Margaret, let me just ask you now about your portfolio. Is there a mix in there between houses and units? Is there any commercial property, or are you pretty much fixed?
\nMargaret:<\/b>\u00a0 I\u2019ve got it all, but what you\u2019ve got to understand, as well, is that I don\u2019t have a mix of houses and units so I can have a mix of houses and units. It just worked out that way. The reason it worked out that way is because I\u2019m a firm believer that you buy the kind of property that the demographics demand.
\nAgain, I was writing an article about that this morning, where I was talking about the fact that when people start to invest, often they have this false notion where they\u2019ll say, \u201cI\u2019m going to start out with a unit,\u201d because they think. \u201cI can start out with a unit because it\u2019s smaller, I\u2019m biting off a smaller amount, and everything will be easier about that unit.\u201d But it could be a big mistake. If you buy a unit in an area where everyone who lives there are families with two kids and a dog and a couple of cars, then you won\u2019t get demand for rentals, and you also won\u2019t get as many buyers when the time comes for you to sell it. So it won\u2019t grow as well.
\nThere are some areas where the units grow better than the houses because of the demographics, and there are some areas where the houses grow better. The same goes with the rents. Because I look into where I\u2019m going to buy before I look at what I\u2019m going to buy, I\u2019ve chosen all the areas and then I\u2019ve ended up with a mix of houses and units. And I also own two commercial properties.
\nKevin:<\/b>\u00a0 Given that you\u2019re not fussed on seeing the property before you buy it, would you buy outside Australia?
\nMargaret:<\/b>\u00a0 No.
\nKevin:<\/b>\u00a0 Tell me why.
\nMargaret:<\/b>\u00a0 That has nothing to do with not being able to see it. That has to do with me not being able to effectively verify or trust the information that\u2019s coming to me. Some people may be able to do that, but typically, when someone buys overseas, they are trusting the information or the research data that\u2019s given to them by someone in that transaction \u2013 and it\u2019s most likely going to be the person who has the most to gain out of that transaction. It\u2019ll be either the seller or someone acting on the sellers behalf, or a middle man or whatever. So, not only can you not independently verify the information, it\u2019s very difficult to do so.
\nYou know, in Australia, we just know. Especially when you\u2019ve been around long enough, you just know the websites you can trust. But if you\u2019re buying in America, you could be going off a website that\u2019s total fabrication, and you\u2019ve got no real way of knowing that. We know here that we can get council information, and we\u2019ve got certain sources of information that we can know and trust. Whereas if you\u2019re buying in America or England or Uganda, or wherever else we want to buy, we can\u2019t really trust that information.
\nBut, in addition to that, even though I don\u2019t go and see the properties and I don\u2019t manage them myself, I know that if everything falls into a big hole, I\u2019ve got the capacity to fly in there, land, go out from the airport to the property and say, \u201cRight. Let\u2019s get this sorted.\u201d That\u2019s very hard when you\u2019re buying overseas.
\nYou\u2019ve also got to ask the question\u2026 Most people who buy overseas do so because they\u2019re responding to some kind of advertisement that they\u2019ve here Down Under for that overseas property. Why did those people have to come this far to sell their property? If their property is that good, the locals would buy it.
\nKevin:<\/b>\u00a0 You could say the same about the people who are currently selling properties to Australians out of America, couldn\u2019t you?
\nMargaret:<\/b>\u00a0 The American people who have come Down Under to sell the American properties? Well, that\u2019s exactly what you say about them. Let\u2019s not argue the fact, and I\u2019m probably going to have some come and stalk me in the street, but that\u2019s alright; they can join the queue.
\nIf they\u2019re down here selling property, has it occurred to anyone to wonder why don\u2019t the Americans buy it? Someone said to me once, \u201cThe Americans have got no money because of the economy.\u201d That\u2019s garbage. I know a lot of Americans who have a lot of money, and I can tell you now they wouldn\u2019t be touching American property with a ten-foot pole.
\nKevin:<\/b>\u00a0 They\u2019d probably be more interested in buying Australian property.
\nMargaret:<\/b>\u00a0 Probably. The other problem with it is, of course, that after you settle it\u2019s very difficult to oversee property management from another country. America especially has notoriously bad property managers and all sorts of issues with squatters and bad tenants, and all that kind of stuff.
\nKevin:<\/b>\u00a0 Yes. It\u2019s a totally different system. Let me ask you about research for a moment. How much time do you recommend someone should spend researching an area, and researching a property, before they make the decision to buy?
\nMargaret:<\/b>\u00a0 As much as it takes for them to answer the 20 questions and be sure they\u2019ve done everything and have left no stone unturned. Having said that, of course, you can\u2019t have the old \u201canalysis paralysis.\u201d I get a lot of people who actually use the research as a crutch or an excuse for not buying.
\nPeople have a remarkable number of excuses. Even those people who say, \u201cYes, I want to buy a property. I\u2019m definitely ready. We need to do this, \u201d will still make excuses. I see it every day. They\u2019ll have all manner of excuses. \u201cMy daughter\u2019s ballet school burned down, and we had to remake all the costumes, so we couldn\u2019t do it this week.\u201d Pretty soon, you wake up and you\u2019re closer to retirement than you\u2019d realized, and you haven\u2019t planned. You start to have all that regret that you didn\u2019t do it when you could do it. People put all sorts of barriers in their own way.
\nThe research is one of those things that is crucial that you do. You must do a lot of it, and you must independently verify any written research that\u2019s coming from anybody else. You also must learn how to read that research and overlay it over future matters, to work out what it means tomorrow. It\u2019s fine to get research that says, \u201cX area has grown by 15% a year for the last three years.\u201d It doesn\u2019t mean anything to you. You have to know what\u2019s going to happen in the next ten, not the last five. You\u2019ve got to learn how to overlay the information you\u2019re getting over future matters, so that you understand what it means and where it\u2019s going to take that area.
\nBut by the same token, don\u2019t be so long in doing the research, and don\u2019t use it as an excuse. Investors say to me all the time, \u201cI can\u2019t buy yet because I haven\u2019t done enough research.\u201d You\u2019ve got to buy sooner or later because property isn\u2019t going to buy itself and put it into your portfolio.
\nKevin:<\/b>\u00a0 Great advice. I want to ask you one more question before we have to close off. What\u2019s the most important piece of information, or the most valuable piece of information, anyone\u2019s ever given you about investing in property?
\nMargaret:<\/b>\u00a0 That\u2019s a really hard one, because people don\u2019t seem to be brave enough to give me advice.
\nKevin:<\/b>\u00a0 Go back to the early days. Maybe your dad?
\nMargaret:<\/b>\u00a0 Dad never gave me any property investment advice because he never invested in property himself. He bought property to live in, but he never invested. I use the term \u201cinvest in property\u201d as being very distinct from buying owner\/occupier property. I think there\u2019s a big difference. There\u2019s a difference in how you buy it, and there\u2019s a difference in what you buy. What you would buy to live in is entirely different to what you buy to invest in. That\u2019s really important.
\nKevin:<\/b>\u00a0 It\u2019s a different mindset, too, isn\u2019t it?
\nMargaret:<\/b>\u00a0 It\u2019s got to be a completely different mindset. It\u2019s when you start blurring the lines between the two that you start to stuff up and make errors.
\nOne of the overarching pieces of advice that Jan Somers probably gave through her book was that there was really nothing to be frightened of with property, and that you pretty much needed to make the move now rather than wait around. My capacity to be able to always make the move and recognize when I\u2019m putting up my own barriers and then remove them has led me to be able to continue to buy property. I haven\u2019t always got it right. I\u2019ve bought duds, and I\u2019ve bought fabulous properties, as well. That\u2019s pretty much what most people will do if they buy often enough.
\nProbably it would be the advice that Jan Somers gives: don\u2019t be afraid of it, because it\u2019s not going to kill you.
\nKevin:<\/b>\u00a0 Margaret, based on your experience over a period of time, what would you say is the most critical period for investors, when they\u2019ll either get it right or get it very wrong?
\nMargaret:<\/b>\u00a0 I think one of the things all investors have to know about investing in property is that in those first five years \u2013 what I call the \u201cbuild phase\u201d of property \u2013 you\u2019re not going to see a lot of results typically in those first five years. You might. You might hit it lucky. I believe that in all well bought property, over a ten-year period, there\u2019s going to be at least one period where the property performs exceptionally well and has a really good boom year. But that boom year might not come until year seven or eight. Or it might come in year one, and you could be one of the lucky ones who just gets it right straight up, and you get that in the first year.
\nTypically, for most investors, those first five years are the build phase, and you\u2019ll spend that first five years taking one step forward and one step back. You\u2019ll buy property, but because of all the high costs in Australia of buying property, you most likely wont even get the gain in that first year to recover those costs, and you\u2019ll feel like you\u2019re behind. Unfortunately, that\u2019s very debilitating, and you can be forgiven for thinking in those first five years, \u201cThis doesn\u2019t work, property\u2019s no good, I\u2019ve bought a dud,\u201d and really lacking in confidence. If you can break through that five-year period and get into that second five-year period, that\u2019s really when everything starts to happen.
\nIn my own portfolio, we bought the first property, and it was two years before we bought the second. It was another year before we bought the third. We really struggled to get seven in our first five or six years. But in the seventh year, I think we bought eight properties in that one year, because all of a sudden, we\u2019d laid the groundwork. We had a reasonably wide investment base of seven properties, and all of those properties started to come into their own around about the same time. Our equity was suddenly growing very quickly.
\nI guess my advice to investors is to hang in there and have the right expectations. Don\u2019t expect that you\u2019re going to get this right straight up, but unless it\u2019s a real lemon, keep the property in the portfolio. Keep hanging in there. Keep plugging away and adding to the portfolio for the first five years, and it will start to kick on from five years on.
\nKevin:<\/b>\u00a0 Wonderful. On that note, Margaret, we\u2019re going to say thank you very much for your time. It\u2019s been great talking with you, as always. All the success for the future, too.
\nMargaret:<\/b>\u00a0 You\u2019re welcome.<\/p>\n","protected":false},"excerpt":{"rendered":"

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