Property Investment & Wealth Creation Australia | The Michael Yardney Podcast 16 things I wish I knew when I started investing
I'm often asked what I would do differently if I could live my investing journey all over again.
If you ask me, one of the keys to investment success is the ability to pick yourself up from setbacks, learn what you can from them (including your own limitations) and simply try again.
So, to help prevent you from making the same mistakes, I've put together 16 things that I wish I'd known when I first started investing.
- The value of education
My first couple of investments were successful, but the worst thing that can happen to a beginning investor is to get it right the first time – you think you're smarter than you are when in truth my early successes were because of a rising market rather than my own "brilliance".
Thankfully, I recognised this and set about becoming better educated by reading books and seeking out teachers, mentors, and consultants for advice.
And I still continue with my education and personal development to this very day.
- Goal setting
Far too many people invest in property with no idea what they want to achieve or by when. They may buy one or two investment properties, usually in suburbs where they live or "understand", but they haven't set any clear long-term goals.
Setting goals helps you focus because if you don't know where you're going, while any road may get you there, every road may also get you lost.
- Create a property team
Because everyone has lived in a property of some sort, most people think they know a bit about property.
While property investing may be simple, it's not easy and that's not a play on words – it takes skill.
And sometimes those skills should come from other people who know more than you do.
So, create a good team around you including mentors and advisors or your "brains trust" as I like to call it.
However, if you're the smartest person in your team, you're probably in trouble.
- Think rich, not poor
You probably believe that you deserve to be rich and successful.
The problem is your income will seldom exceed your personal development.
That's why it's important to develop the mindset of rich people and the rich habits of successful property investors.
- Have an abundance mindset
To become successful, you'll also need an abundance mindset.
What do I mean by that?
An analogy is to think of yourself as a cup.
If your cup is small you can only accumulate a small amount of money, any extra will spill over and you will lose it.
You simply cannot have more money than the size of your cup.
Instead, develop an abundance mindset in which your cup is big and deserving of being filled with success.
- Delaying gratification
Far too many people can't resist the instant gratification of buying that shiny new toy using their credit card thinking the money in their limit is theirs.
It's not – it's the bank's money you pay interest on for the privilege of using.
To become rich, you must learn to delay gratification as wealth is the transfer of money from the impatient to the patient.
- Overcome your fears
The truth of the matter is that fear is a powerful human emotion.
While it can help us, it can also prevent us from investing because we illogically see it as too "risky".
However, with a sound investment strategy, and a property team around you, you can minimise the risks.
- Don't let failure hold you back
We all make mistakes.
The difference between ultra-successful people and the average Australian is that successful people don't let failure hold them back.
Instead, they get up and try again.
What I mean is that, because we can't go back in time to change decisions that we've made, there really is little point in dwelling on them, is there?
Instead, I prefer to learn from my mistakes and move forward smarter than I was before.
And in the world of property investing, there is so much to learn and unfortunately, mistakes can be costly.
- Understanding the power of compounding and leverage
One of the big secrets to successful property investment is the power of compounding and leverage.
This means the earlier you start investing and the longer you hold your properties, the more time your money has to grow.
And with a long-term horizon, you don't have to be overly concerned about the ups and downs of the market.
- It's not a get rich quick scheme
Sure, Sydney's property market has made heaps of money for investors over the past six years.
But for the 7 years before that, the market was actually flat.
Having invested for over 40 years now, one of the many lessons I've learned is that property investment is not a "get rich quick" scheme.
It's a get rich slow one!
- Ignore white noise
You're probably aware how the media loves a real estate story – particularly those that "predict" a property bust.
The truth is that a significant price falls in well located "investment-grade" capital cities properties is unlikely.
So, learn to ignore the "white noise" and keep your eyes on your long-term goals while not taking notice of short-term market vagaries.
- Both capital growth and cash flow are important
In my mind residential real estate is high-growth, relatively low yield investment vehicle and the key to wealth creation is to grow a substantial asset base of "investment grade" properties.
But I learned an important lesson during "the recession we had to have" of the early 1990s.
I realised that while capital growth gets you out of the rat race, you need solid cash flow to keep you in the game.
- Location is non-negotiable
Remember that 80 percent of your property's performance will be due to its location and about 20 percent because of the property itself– so never compromise on location.
- Don't throw your money away
To become rich, you will need to learn to spend less than you earn, save the difference and eventually invest it.
The problem is that too many people throw away their money buying things they don't need with money they don't have to impress people they don't like.
- Gratitude is important
Wealth means different things to different people.
But I've learned over the years that true wealth has nothing to do with how many properties, or how much money, you have.
True wealth is what you're left with when they take all your money and properties away.
16. Give back to the community and charity
Apart from being grateful for what you have, you also need to give back to the community and charity.
Our successful property investments and business have made us extraordinary lucky so I believe it's our responsibility to help others who are less financially fortunate.
The lesson from all of this is that property investment is a long journey.
There will be market ups and downs and lessons learned, along the way.
But with the right education and the right support, you can create and live a wealthy and grateful life.
And we can't ask for any more than that, can we?
Links and Resources:
Metropole Property Strategists
Metropole's Strategic Property Plan – to help both beginning and experienced investors
Some of our favourite quotes from the show:
"At the start of my investing career, I believed that I knew enough to be successful, but that wasn't the case as, of course, I didn't know what I didn't know." –Michael Yardney
"One of the keys, therefore, is to overcome your fears and learn to be comfortable with being a little uncomfortable, especially in the beginning." –Michael Yardney
"Rather than look for the "next" hotspot, find a location that has a long history of strong capital growth and one that will continue to outperform the averages because of the demographics in the area." –Michael Yardney
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