Business Daily.
Business Mentor
A+ R A-

You’re reading about it, so clearly you’re interested in property investing

You’re reading about it, so clearly you’re interested in property investing.

So, why haven’t you done anything about it?

In my experience, the number one reason some people can’t take that first step is fear.

There’s excellent evidence to support the notion that wealth can be created through investing in property – so why are people so scared of it?

I'm Brett Warren from Metropole Property Strategists - leading property buyer's agency in Brisbane - and I’ve dealt with countless would-be investors over the years, and here’s what I’ve discovered…

First of all, there’s very little education about finance and budgeting in schools, especially in the areas of investing beyond compound interest.

As a result, we grow up absorbing our parents’ management of money and their attitude toward it.

We’re often taught that debt is bad and the path to our nest egg involves putting our pennies in our superannuation funds.

This thinking is handed down from previous generations who wholeheartedly believed and practiced this circle of life.

There are also ingrained beliefs in our culture that the timeline of life involves studying hard, working hard, getting a good job, buying a home, paying it off, and being sensible with our money, so we can save up a little nest egg to retire on.

Following this path means that our twilight years will involve living on less money than during our working years.

All of these financial beliefs can be true, to an extent:

  • A huge percentage of Australians will, in fact, retire with far less money than they can comfortably live on.

  • We absolutely should be smart with our money and stay away from bad debt.

  • We should work hard and retire easily.

But there is another way of thinking when it comes to money – and the people who go down this path are generally going against the grain of the time-honoured “way it’s always been done”.

These people choose to veer from the safety of the well-worn path and carve out their own trail.

Of course, that’s why the fear of failure is so widespread.

It means stepping away from the familiar understanding of money that we were brought up with.

Property investment involves debt, and that can put people ill at ease – especially when we’re taught to pay off debt, not accumulate it!

Yes, it’s right to be cautious when borrowing money, but it’s also important to understand the difference between good debt and bad debt.

A solid investment property plan is all about good debt that works for you.

Find a good mortgage broker to look at your finances and work out what you can and can’t do, and this will help you greatly minimise your risk.

Why do property investors fail?

If you’re worried about the investors who don’t do well out of property – and the truth is, there are a lot of them – I can tell you the reason – they’ve often succumbed to the basic no-nos of real estate:

  • They bought with emotion

  • They didn’t do their research

  • They bought the wrong property in the wrong location

  • They bought too much, too fast and got in over their heads

  • They were over-capitalised, over-paid, or made one of a dozen other mistakes that investors can make when purchasing property without a clear strategy.

Buying real estate as an investment is vastly different to buying your own home.

Property investment is a process, not an event

And the property you eventually purchase will be the physical manifestation of a whole lot of decisions you have to make, and make them in the right order.

In fact, property investment is a team sport and you need to get a good team around you.

Remember how I said that successful investors often walk off the well-worn path?

They do so, but they don’t do it blindly.

They have a map that keeps them on track, helps reduce the risk, and teaches them as they travel forward.

This is a starting point to show you what constitutes a good “map” for you to follow on your real estate investment path:

1. A solid education

Firstly, educate yourself and increase your knowledge bank, but be careful who you learn from.

Read books and blogs, and talk to friends and colleagues who’ve successfully invested.

Start to fill your head with other people’s knowledge and gain some confidence in how property investment works.

You’ll find it’s not as scary as it might seem at first.

2. An A-Team of advisors

Educating yourself is important, but surrounding yourself with those who specialise in certain fields is just as crucial.

The smartest investors find people who know more than them, so they can leverage their expertise.

Your team may consist of a knowledgeable finance broker, a property strategist and a buyers’ agent (these are very, very different skills) and a tax and structuring advisor.

It’s pivotal to your success that you are receiving quality and trustworthy information from independent people who really know their stuff.

3. Get a mentor

Mentors are invaluable.

They are people who’ve already walked the path ahead of you and can help you make sensible decisions and avoid costly mistakes.

Usually, they’ve learned those mistakes the hard way and are wiser for it.

Their success and encouragement will spur you to stick to your investment plan and continue to build your portfolio.

4. Fear should be your motivator, not your obstacle

Many investors are wary about taking action as they’re fearful they’ll make a wrong decision – but shouldn’t you be more afraid of retiring without enough money to live on?

Be afraid of working until you’re 70!

For many Australians, the harsh reality is that they’ll be working well into their 70s simply to survive.

To me, that indicates that it’s time for the old way of thinking to be refreshed, to ensure fear doesn’t stop would-be investors from walking a successful path to a financially secure future.

5. You need to plan

So while the property markets will create significant wealth for many Australians, statistics show that 50% of those who buy an investment property sell up in the first five years.

And of those who stay in the investment game, 92% never get past their first or second property.

That's because attaining wealth doesn’t just happen, it’s the result of a well-executed plan.

Planning is bringing the future into the present so you can do something about it now!

Just to make things clear...buying an investment property is NOT a strategy!

It's important to start with the end game in mind and understand what you need and what you want to achieve.

And then you have to build a plan, a strategy to get there.

The property you eventually buy will be the physical manifestation of a whole lot of decisions that you will make, and they must be made in the right order

That's because property investment is a process, not an event.

Business Daily Media