Mistakes Property Investors Make

“Learn from other peoples mistakes,

…. cheaper that way you would agree?”

Having worked with many seasoned investors over the years, we continue to note recurring themes as 80% of prospects (who can afford to invest) always find a reason not to or those that do tend to make a comfortable and easy investment decision.

We got to learn and understand that these “want to be investors” do not have a good relationship with money! What this means is that they were raised with a belief along the line of “money is evil, money doesn’t bring happiness, money does not grow on trees, work hard on a job to retire etc, etc, etc.” And so, the results they then get are to keep correcting for potential mistakes of moving outside of their belief systems (instead of changing their belief) and thus find an excuse NOT TO INVEST or to invest in a mediocre investment property.

Others (20% of people we talk to) who have invested using our professional services or similar services, reminisce about their property investment journeys and refrain from pondering on ‘how they they could have failed had they not changed their thinking to meet their future desired goals’ and these same investors have a healthy relationship with money and are comfortable owning it.

Investor Regrets

Regret : ‘I should have started investing in property sooner’

Yeh, yeh! You were not ready or chose not to be open to listening and sadly many people learn the importance of investing for their future and also retirement in their later years when they can look back and join the dots of life. Our view it is never too late to start investing as inflation will erode your current investment and you will require higher incomes to be able to purchase at the future value of goods/travel/life’s luxuries etc.

When you don’t know what you don’t know it is ironic as to how many people underestimate just how simple and attainable property investment can be, only to realise that it had been well within their reach for many years – but mentally they were not ready to make an educated and strategic investment decision in line with their goals, needs and requirements.

Solution: Waiting is dangerous and has results you really don’t want or can afford. Failure is defined as “the neglect or omission of expected or required action!” meaning by not taking action you have already failed!

Why wait and miss out on the worlds most powerful tool = Compounded Returns? It is easier than you perhaps understand.

Regret : ‘Reading and believing journalists’

In which world is a Journalist a property expert? Journalists are hired to fill the gap between adverts by creating sensationalism which sells advertising!

Why follow someone like this when you can elect to follow property analysts, reports put out by government and or banks, research undertaken by the likes of a Coles or Bunnings or other large conglomerate who spend a load on getting accurate reports before they make their investment decisions. Surely you would want to be following this reporting and avoid sensational journalism?

Solution: Choose very carefully who you listen to! Apply your research where it makes commercial sense. Connect with industry professionals who will share their research and findings with you. This way your decision is off an informed base.

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Regret : ‘I should never have bought that type of property’

It is widely known that “Not all property is Investment Grade!”

Meaning work with a professional who will help you identify just what type of property and investment strategy will ‘best fit’ your required goals and preferred outcomes.

Not all property is equal and when you remove the emotion and analyse the numbers which underpin and also drive your investment you will be astounded and educated to make an informed investment decision devoid of emotion.

If you compare the numbers (Return on Investment) over the life of your investment (how long you hold it) against other types of investment vehicles and other types of property the difference in your Return on Investment over say a 10 year period could be a staggering $500k by getting your decision only half right.

What does this mean to you over your lifetime is that not only is your investment not working as hard for you as it could have BUT you may also miss out on securing your next and next investment properties by not being able to borrow more from the bank when you want to invest again. This means by waiting you will miss out on vital compounding growth and also probably pay more for the same thing at the time you can borrow! Does this start to make sense?

Solution: Once again work with a professional who understands the numbers and what investment vehicle is better suited to your goals and preferred outcomes and more importantly what to avoid that will detract on what you are wanting to achieve. Do you really know what you don’t know?

Regret : ‘I should NOT have gone with my gut, but rather listened to ….’

NB! Careful who you choose to listen to!

Most of us approach people who will tell us what we want to hear, which will then support our thinking and beliefs. Yes?

So why do that we have to ask ourselves, because we improve our chances of ending up with a below average property, which costs us money to hold, on the off chance we may get capital growth?

“Wouldn’t you rather want to be challenged so that you can arrive at an Informed Investment Decision?”

Sure property investment, when taking the plunge to invest, it’s easy to lose confidence and be swayed one way or another by those with good intentions who are all too willing to share their opinion on exactly what, where, and when to buy. These well-meaning folk could be friends, family, or even a trusted professional which can make it difficult to overlook their advice.

When taking a step to invest we also tend to err on the side of “caution” and make that safer comfortable investment decision based on what we think we know. Yes sound familiar?

We think it is because we don’t want to get it wrong BUT the reality when if we have the guts to dig deep enough is that we are making this decision on our current beliefs and relationship with money. So if it is ‘uncomfortable” we tend to err on the side of caution until it is comfortable. This is an expensive approach and your money will never work as hard and smart for you until you change your belief and relationship to money. Does this make sense?

Solution: Dig deep, be open to being challenged, ask for help from a professional in terms of what investment vehicle will better fit your end goal in line with your budget. Ask questions, be open in sharing your thinking and what others are telling you, challenge the advice and most importantly be open to listening, even when it makes you feel uncomfortable.

A comfortable decision is not what you are after!

Regret : ‘Waiting to see ….’

How many prospective clients have used this one and always to their own detriment – but hey, this is what they planned for so why even question it?

When ever we hear “I am going to wait to see (what the market is going to do) inevitably it actually means “in my own mind I an not ready to commit to myself because my belief in and around my relationship with money is in the wrong place”

Why wait and pay more income tax, not receive rent, miss out on capital growth, lessen your retirement planning goals and minimse your chances of retiring in the lifestyle you deserve and want for yourself?

Solution: Catch your thinking, understand why you are procrastinating and who is it serving, the direction of your current wealth planning is predetermined by your input. If you keep doing the same thing, you will always get what you have always gotten and remember

Regret : ‘What is failure ….’

Think about it, “failure is the neglect or omission of expected or required action to give you the results you want and need!

Without action the results you get are the results you keep getting now. Are you happy with these results? Who would be and why when there is so much choice out there to improve on ones position in life?

Regret : ‘Near Sighted Investing’

How often our investors are fixated on investing where they live because they know their area they live in or grew up in! This is a result of wanting to make a nice easy comfortable decision over an Investment One.

How many other suburbs, locations, State’s have stronger fundamentals than what your comfort zone offers? Are you open to receiving information which is in contradiction to what you have been told or how you are thinking?

Solution: Be completely open minded to hearing information you didn’t go out to look for. Undertake your own research in order to understand market fundamentals which will underpin and drive your investment. Speak to a professional who will assist you in matching a location and dwelling to your preferred investment outcome. Not all property is investment grade, keep this in mind. The fundamentals and numbers are what drives your investment, understand these … in all likelihood that is not going to be in your suburb or even State.

Regret : ‘I didn’t even understand or consider how the numbers might work ….’

Yeowwww! And yep this is a common one!

How unfortunate, and by the time you start to realise that it is an investment driven by the numbers it is too late, you are the proud owner of a below average investment vehicle. When we get to review our clients existing investment portfolio and go through the numbers with them they are more often than not left astounded at the performance when compared to if they had invested in an Investment Grade property where the numbers supersede what they have purchased.

As per above if the numbers are working in your favor, you can get your next and next investments that much sooner. Compound growth working harder for you adding immense value to your overall end result at the time you want to mature your investment.

Solution: Be mindful, this is an Investment vehicle secured with your head free of emotion. If your bank manager offered you two investments, one you can touch and feel with a pretty gold bow wrapped around the black box sitting in the banks window, which you can drive past and show your loving partner or mates saying that one is ours earning you 8% pa OR one in the same branch, sitting in the safe without a box or ribbon and you don’t get to feel and touch it at 19% with the same risk profile …. which investment would you secure and why?

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