Michael Yardney

What Mistakes do we See Investors Make?

By Michael Yardney
Published 07/27/2007
Question of the month

Michael Yardney

is director of Metropole - Property Investment Strategists and a highly regarded property commentator. He is the author of the best seller - "How to Grow a Multi Million Dollar Property Portfolio - in your spare time" and co -author of "All You Need To Know About Buying & Selling Your home."
www.metropole.com.au

View all articles by Michael Yardney

One of the big mistakes I see investors make is getting distracted from their plan or strategy for wealth creation.

We live in a world with distractions everywhere. It is easy to get distracted by bad advice, get rich schemes, unproven investment concepts, or the latest money-making venture.

Then there are the inevitable negative thinkers who show up in your life that kill your chances for success as a real estate investor ... if you let them.

Only last week my wife Pam, who heads Metropole Property Management, told me that one of her clients, who was already a property investor, was considering buying another investment property as they had plenty of equity in the family home.

She knew how well property investment works because the one investment property she owned had increased in value over the years and her house had also grown in value considerably.But she decided against investing because her sister told her that it is a bad time to invest, the property market has slumped and property prices won't go up for a long time.

When Pam asked how many investment properties her sister owned she was told "none." In fact, she didn't even own a house - she was a tenant. It just goes to show you have to be careful to whom you listen.

The sad part is the biggest negative thinkers you are going to run into are going to be your closest friends and relatives. So, in many cases, it's not easy to ignore their negativity.
It takes some effort on your part.Remember, it's not your job to get them to change (they probably never will). It's your role to keep yourself on track, then once they see the success that you're achieving they may change their outlook. Stay focused on your proven and chosen investment system.

You do have a system for your investments, don't you?

If not I suggest you read my book "How to Grow a Multi Million Dollar Property Portfolio in your spare time" where I will give you a system – a blueprint to your financial success. Click here to find out more.

Staying focused is also difficult when you get the other extreme of the distractions and messages out there from many "get rich quick schemes" and so called "property gurus."

My recommended property investment strategy is to invest in prime real estate, add value where you can and wait for the magic of time and compounding to make you wealthy.

The problem for many investors is this strategy is boring and some consider it slow. But successful property investment is a long-term affair.

Many investors look for the latest fad, such as overseas investing or try to finding the next hot spot or speculative growth areas. Other investors consider other types of investments with potentially higher returns.

When you are tempted to do this remind yourself that real estate has been the number one long-term multi-millionaire maker throughout Australia's history, yet most people that speculate in the latest fads have not made much money.

You don't have to look for the latest fads or the latest speculative growth areas if you create your own capital growth through buying a good property at a fair price, then adding value through refurbishments, renovations or redevelopments. By doing this you are manufacturing your own capital growth.

Who Do You Ask For Investment Advice?

By Michael Yardney
Published 03/29/2006
Question of the month

Michael Yardney

View all articles by Michael Yardney

I recently read an interview with a leading property economist who admitted one of his big regrets was that he didn't own an investment property, yet for years he predicted the next property hotspots.

This is a common trend amongst economists and financial advisers. While they are meant to know which way the economy is turning and where to find the best investments, it is interesting how many people have the theoretical knowledge, but very few have actually "made it".

To do well in our changing property markets, you have to educate yourself to enable yourself to make the right investment decisions.

But you need more than that -you need the right mindset - the mindset of a super successful property investor - something I will be discussing.click here for further details.

If you want to improve your investment knowledge, let's look at the options of who you could ask and who you should listen to when you want to become a better educated investor:-

1. Family - How many millionaires do you have in your family?

2. Friends - Are they financial experts? How much do they have?

3. Your accountant - Has your accountant become rich specifically by applying his own investment advice?

4. Lawyer - Has your lawyer become rich following his own investment advice?

5. Financial planners - Be aware that financial planners make commissions based on the investments they sell. How many of them have personally invested in property? You should realise that many financial planners come from the background of having been in the insurance industry and have done some extra study to get a financial planners license. They understand insurance and superannuation and managed funds, but in general do not have a good understanding of real estate.

6. Stockbroker - What returns have they received on the shares they have invested in?

7. Real Estate Agent - How many properties do they own and over what period of time have they bought them? According to the Australian Bureau of Statistics, the average estate agent earns $36,000 per annum.

8. The financial media - How much research has the journalist actually done and what investments has he got?

9. Investment books - Is the author independently wealthy from the information that is being taught or is their income derived from selling books?

10. Investment seminars and workshops - Is the person an investment expert in their field? How long have they been financially secure or do they make their money teaching others?

When reading the BRW Rich 200 List, I found it interesting that there were no economists or stockbrokers in the Rich 200 List.As I mentioned earlier, it is interesting how many people have the theoretical knowledge but very few have the right "mindset".

It's just like all those who have been to seminars and workshops. Most don't ever do anything. That's why to become a super successful investor you need more than just knowledge, you need the courage to take action. You need the right 'mindset'. If we don't get your mindset right, all the knowledge you gain is no where near as valuable to you.

Looking at the BRW Rich 200 List, it's clear there are a number of ways to get in there quickly. These include:

1. Select your parents carefully. It seems good proportion of the really rich in Australia were born wealthy but this is usually measured in their bank accounts rather than their genes or their abilities.

2. If you don't have wealthy parents, the next best way is to marry somebody who is extremely wealthy. Then the trick is to stay married.

3. It is important to recognize from an early stage, the magic of compounding. Most of the Rich 200 are people who worked hard, saved and invested in growth assets long enough to enjoy the feeling of compounding.

4. Try to invest counter-cyclical. Many of the Rich 200 had an instinct feel for assets when they were oversold or overbought. They particularly like to buy property and shares during periods of gloom.

Looking further at the Rich 200 list, there are some things to avoid if you seek extreme wealth and this includes pursuing the latest fad. A number of people made the list a few years ago on the back of the latest dot com or telecom stocks, but now find themselves in the departure section.