By Guest Blogger, Terry Ryder, founder,
hotspotting.com.au and propertyU
Media abounds with lists such as “Top 7 Mistakes Made by Investors” but my list of mistakes to avoid has only one item on it – because all other mistakes lead from this one.
Here it is: Most investors get into trouble because they’re unwilling to spend money on good advice.
Let me put it another way. All of the truly successful investors I know have one thing in common – they treat property investment as a business and they understand that, in a business, you have to spend money to make money.
So they pay for good advice – research information, borrowing options, accountancy and legal matters, depreciation reports, general financial advice, a top buyers’ agent.
And that’s why they’re successful. They make good choices, and avoid calamitous mistakes, because they have access to the best advice and the best information.
Most wannabe investors don’t do that. The philosophy of most Australians is this: Yes, I’m prepared to spend $500,000 on an investment property – but, no, I’m won’t spend $10,000 on expert advice and assistance so I have a plan that makes sense and help in implementing it; nor will I spend $500 on an independent valuation to ensure I’m paying the right price; and I won’t even spend $50 on a research report to guide me on where best to buy.
This is the worst kind of false economy and most prospective investors are guilty of it.
In the lead-up to the Federal Election, Labor politicians tried to sell their negative gearing policy by claiming that the typical investor was someone out there searching for their 20th or 30th investment property.
It was an outrageous lie. The ATO statistics shows that nine out of ten Australians who have investment properties have just one or two. Those with six or more properties are less than 1% of the total.
And there’s a reason why so few have large portfolios. Most Australians do property investment badly. They’re unwilling to put in the time and the money to do it well. So they make poor choices.
In my three decades as a real estate researcher and writer, I’ve met only a handful of individuals with really big portfolios – the kind of 20 or 30-property holdings that Labor dishonestly claimed were common.
One man I know has around 40 residential properties, most of them performing well. He’s the epitome of good investment practice. He has two businesses – one is his day job and the second is his property investing. He’s willing to spend money on good information (he’s been a Premium Member of Hotspotting for many years) and on quality advice. He has surrounded himself with good advisers from a range of property-related fields.
He spends a lot of his time overseas, indulging amazing travel experiences, because he’s been so successful.
But he’s a very rare species. Most people, in my experience, will baulk at spending a few hundred dollars on research information. The mentality of most wannabe investors is to try and grab everything they can that’s free and avoid anything you have to pay for.
Anyone with that mentality is unlikely to succeed in real estate investment.
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