Expert Advice with Michael Yardney. 29/07/2018

Fear and uncertainty leads to procrastination and lack of action and you tell yourself "I'll get around to it" but never actually do.

Times are changing, no longer is the property news all good and the mixed messages in the media are causing some would-be investors to doubt their decisions.

Fear and uncertainty leads to procrastination and lack of action and you tell yourself "I'll get around to it" but never actually do.

So to overcome the fears you may have about property investment you must ask yourself two questions:

1. What do I fear about investing?

2. How realistic of those fears?

Sure, your feeling of fear is real, but it doesn't have to be paralysing. In fact, there are a number of strategies to overcome the fear of investing including:

1. Only listen to people who know what they're talking about

When it comes to real estate, everybody has an opinion – but you know what they say about opinions?

They are like bellybuttons – everybody has one, but in general they are useless.

While your family and friends may have the best intentions for you, how many properties do they own?

Are they financially free?

If they've only ever bought their home and never really invested, then they won’t understand why you might want to invest in property.

It's wise to only listen to people who have property investment runs on the board and have already achieved what you want to achieve, rather than those who’ve never had the same dreams as you.

2. Understand the media's love of sensational headlines

Bad news and sensational headlines sell newspapers and create clicks on websites, but in general property journalists are not economic, financial or property experts.

Just look at all the mistaken predictions about the property market crash that have been in the media over the past decade.

Of course, some specialist publications have experienced property journalists on staff, but the general news you might see online is likely written by a young cadet who is miffed about not being able to afford to buy that waterfront unit in Bondi he is writing about.

Just like listening to experts, only read media stories that have been written by journalists who understand the economy, real estate and property investment.

3. You don't need to know everything before you get started

If you want to know everything, you'll never get started.

Be comfortable knowing that you have enough knowledge to get started and understand you will learn more along the way. Accept that you are likely to make some mistakes, but minimise them by getting a good team around you including an independent property strategist, a proficient tax accountant a smart mortgage broker and a buyers' agent.

These people have the type of experience that money can’t buy, but you can hire their expertise and profits from it.

4. Protect yourself with risk management

Too many novice investors buy with their eyes wide shut to the impact it will have on their finances in the years ahead.

Sophisticated investors, on the other hand, have risk management strategies which allow them to hold and grow their property portfolio over the long term. They understand that while capital growth is the key to wealth creation, its cash flow that will see them through.

Sophisticated investors not only buy property, but time to see them through the rainy days allowing them to last the distance.  They have cash flow buffers, perhaps through a line of credit or offset account, to cover any shortfalls when their property is vacant, or an unforeseen expense arises.

Other risk management strategies you could consider include:

•    Fixing the interest on a portion of your loans to minimise the risk of rising interest rates.

•    Protecting yourself with life and income protection insurance.

•    Taking out landlord insurance to cover for damage to your property or unpaid rent.

5. Understand the biggest risk is inaction

Money doesn’t discriminate; it doesn’t care who you are or where you come from.

No matter what you did yesterday, today begins anew and you have the same rights and opportunities as everyone else to become wealthy.

Yet the sad reality is that the majority of Australians will never achieve financial freedom because they don't take action.

The good news is you can do things differently.

You can choose to overcome your fears and take your financial future in your hands.

Of course, while property investing may be simple, it’s not easy.

And that’s not a play on words.

Fact is, around 20% of those who get involved in property investment sell up in the first year and close to half sell their property in the first five years. And of those investors who stay in property, about 90% never get past their second property.

So, if you want financial freedom from property investment to fund your dreams, you’re going to have to do something different to what most property investors are doing.

You’re going to have to listen and learn from different people. You’re going to need to set yourself some goals and follow a strategy that’s known, proven and trusted.

Then you grow your property investment businesses one property at a time.

It really is as simple as that.

So, there is really nothing to fear – is there?



Michael Yardney is CEO of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.

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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.