What to do when you accept that you are know nothing about property investment?

Discussion in 'Property Experts' started by Anthony Brew, 14th Mar, 2017.

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  1. Anthony Brew

    Anthony Brew Well-Known Member

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    I have learned a lot from this forum over the short time that I have been reading - enough to know that I definitely don't know enough to pick a good investment property.

    You know how when you start learning anything, after a short time you think you know everything about it, then after learning a bit more you are able to see the vastness of what there really is out there and realise you actually know virtually nothing about it? This is where I am, and honestly I don't want to make an entire profession of property investing - I have a profession already. Actually I have had a couple and it is a crazy lot of work to learn a new one.



    Some things I know that I don't know:

    I know that I don't know how to find all the factors like population growth, income growth, etc., or even what all the factors are, which are needed to be able to assess a location. I also know that I am not going to find this information without personal guidance, which, lets face it, is not likely. So I accept that I am not capable of finding this out on my own.

    I also understand that property moves in cycles but I know that I don't know how to pick what part of the cycle an area is in.



    So that leaves two options:
    1. Making a slightly (but not very well) educated guess; or
    2. Going with an advisor

    But then we come back to the problem with advisers.
    If they were really that great, they would be retired and not selling their advice. No disrespect and I am sure some offer solid advice, but I think this has some weight regarding a lot of advisers in general.
    Secondly, they get paid whether you purchase a dud or not, so there is not much incentive.
    Thirdly, do you remember people you went to uni with? Most of them were really not too bright (to say the least) - but they still need jobs and some of them will end up as financial advisers, so avoiding one of these type, who is not trying to cheat you, but is just not very competent, is an issue.

    By the way, I am not saying all advisers are like this. I am just saying picking someone good in any profession is going to be difficult, and this is especially serious when it comes to half a million dollars or more and what can be a decade of your life's savings and financial investment plans.

    I really wish I had an advisor that I trusted. It would take a lot of the stress off this whole thing. I am also happy to pay for the advice, but trust is a problem and paying for advice does nothing to improve confidence in an adviser.

    Also, I can also see that all of this is going to lead to analysis paralysis because I am too worried about making a mistake, yet at the same time have no way to make an educated guess.

    I would actually like to pay advisers for just their analysis on suburbs with no obligation for them to actually go and find me a specific property, which I assume they will want to do since purchasing a property is where the big money is for them, so I am not sure if this is an option they would even bother with.



    So back to the topic title:

    What to do when you accept that you are know nothing about property investment (particularly where to buy, and possibly when)?


    Thanks for taking the time to read this.
     
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  2. ellejay

    ellejay Well-Known Member

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    I think you've only been registered and reading for a few weeks?! If it was that easy to pick a winner we'd all be billionnaires by now. Seriously though you may be at risk of over thinking things. We're not splitting the atom here. Most threads suggest people are choosing a city based on entry price budget, yield requirement, personal preference, perception re point in the cycle, risk appetite, overall strategy. Some people only buy in the capitals, others will go for regionals for personal reasons. Some people spend a lot of time reading and posting stats and graphs but have they had more success than investors who don't?

    I don't agree with the argument that if mentors were any good they'd be fully retired. These people are generally not reliant on a JOB and like to earn good coin doing what they love. Any descent ones will enable you to talk to their previous clients. If they get bad feedback on here they would know they risk business disaster.

    Many of us didn't have forums like this one, buyers' agents or all the online info/stats etc when we started but did okay. Some did more than okay.

    Overanalysis and lack of trust are your worst enemies.
     
    Last edited: 15th Mar, 2017
  3. ellejay

    ellejay Well-Known Member

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    Depending on your situation you may be able to link with some other investors in your area, maybe through the meet ups. You could drive around, look at suburbs, go to auctions and open homes, and analyse sale and rental prices locally. If you're in a city focus on a few suburbs and get to know them well. Start small and grow from there.

    Make a few rules about what your bottom line is when looking for property I.e, population size, price, holding cost, strata or freehold, standalone houses or just units or mix of both, does it have to be walking distance to public transport? Deve potential?

    Piggy backing on the success of others makes much sense. It will cost money but I always found I got more money back. Always check on here before using a BA or mentor.
     
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  4. Tom Simpson

    Tom Simpson Well-Known Member

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    How to choose a good adviser 101:

    Ask for recommendations from people you know and/or trust (such as the experienced investors on this forum)
    Make contact with some of these advisers
    Ask to speak to their previous clients
    Ask about their personal portfolio and how long it has taken them to accumulate this
    Ask if they rely on a pay cheque or is this a bonus for doing something they love

    Take advice from people who have done what you want to do

    Ultimately people get paid on results. It's in the smart advisers interests to get you the best results possible so that you are successful, recommend his or her services and come back for future purchases.
     
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  5. VB King

    VB King Well-Known Member

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    Biggest learning is not what you've learnt from the forum or any other source.

    It's the realisation that you don't know what you don't know.

    That puts a different lens on things.

    So approaching things assuming you don't know is empowering.

    Then you realise there is no perfect information. And you have to learn to weigh the information you have (and a lot of it will be conflicting) and interpret it.

    That's true empowerment.
     
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  6. Perthguy

    Perthguy Well-Known Member

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    I can't pick the top or bottom of a market cycle. But I have made money on every property deal I have done.

    When I first invested in 2007, I looked around in Perth but I found property was dreadfully overpriced. Turns out the median house price was higher than Sydney! :eek:

    Sydney market was still recovering from the 2003 boom, so I decided to avoid. I looked around in Melbourne and prices there were more sensible. I set a budget and narrowed down some areas. Then I did what @ellejay suggests and I went over and got to know the areas. For example, something I looked out for was early signs of subdivision and new builds in areas with low entry points closer to the CBD.

    I wanted a development site in an area undergoing redevelopment. Them selecting an individual property, the usual like away from main roads, close to parks etc. It didn't take too long to track down a property to suit.

    Getting closer to sell time, I watched the market like a hawk and sold just before it stalled. Of course 12 months later it started moving up again but I almost doubled my money. Who cares if I didn't squeeze out every last dollar?

    In retrospect, I didn't buy at the bottom of the market or sell at the top of the market. However, I still made money, so does it matter? Not to me.
     
  7. VB King

    VB King Well-Known Member

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    Yes the median was higher than Sydney.

    I worked with a mate who relocated from Perth to Sydney.

    He sold his house for $200K in Perth and bought for $600K in Sydney after the last Sydney boom.

    3 years later he sold his Sydney place for exactly what he'd paid for it.

    And then bought back into a Perth at $600k +.

    Poor *******, the move didnt end up doing much for his career either.

    Understand cycles.
     
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  8. Perthguy

    Perthguy Well-Known Member

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    Terrible! :(
     
  9. VB King

    VB King Well-Known Member

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    Yeah, to be fair he was swapping a PPOR for a PPOR.

    - But understanding cycles may have yielded a different result.

    - As would taking a more conservative approach and waiting a year or two before committing to a new city so permanently.
     
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  10. Phase2

    Phase2 Well-Known Member

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    Since I joined PC, I realised I've probably been trying to take the wrong approach in learning about property investing. I attended some Michael Yardney (MY) seminars a few years ago, had some friends who were planning the LOE approach etc.. I read the Jan Somers books, and the MY ones and thought I knew something about it.

    Turns out I was only seeing a tiny piece of the picture. So I've stepped back to go and re-learn everything I know about investing in regards to structuring, cash-flow, financing etc. Now I have a pretty good idea about what I'll do to restructure my current holdings, and set myself up for the next phase. Property is only part of the picture for me, shares and other holdings are factored in too.

    Here's what I've learnt about property:
    1. It has historically moved in cycles, everyone knows this.
    2. Everyone is pretty much guessing where we are in a particular cycle for a given property market.
    3. Prices are typically driven up by a combination of desirability and affordability (household incomes and availability of credit)
    4. Desirability is a bit ambiguous, but typically includes close proximity to infrastructure, good school zones, or commercial hubs, or something else, like beaches, hills with views etc
    5. Household income is usually proxied by the strength of jobs and the local economy.
    6. Buying in a rising market gives a better chance of "making" money. (seems stupidly obvious when it's pointed out) thanks @MTR
    7. Pull equity whenever you can, if the market drops and you haven't done it, you've missed an opportunity.
    8. If you're suffering from analysis paralysis, pick somewhere that's neutrally geared, in a major city and "Ready, Fire, Aim" cheers @kierank
     
  11. ellejay

    ellejay Well-Known Member

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    Exactly. If you think it's frustrating being one month in and feel like you don't know anything, wait until you've been doing this stuff for years and still aren't a billionaire :p:D
     
  12. Perthguy

    Perthguy Well-Known Member

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    I am 10 years in I'm not rich but I am doing ok. Remember, it's a marathon, not a sprint.
     
  13. mikey7

    mikey7 Well-Known Member

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    @Anthony Brew , took me 7 months of reading, learning and planning before I decided to make the jump. I still feel like I have no idea, yet I'm currently keeping an eye out for my third.
     
  14. Shankiedoodle

    Shankiedoodle Well-Known Member

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    great thread, i'm looking for my property, and just the feeling that there should be so much more i should know is probably one of the hardest bits.I like your point 8 phase 2.
     
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  15. MTR

    MTR Well-Known Member

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    Never stop learning, you are on the right track
     
  16. Gockie

    Gockie Life is good ☺️ Premium Member

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    @Anthony Brew, agree with these other long term posters. Keep posting. I'd like to know, which state are you in? It would be great if you go to some meetups because along with the forum, that's a great place to exchange ideas and you might just pick up gems of advice and find a strategy or two that you are happy to replicate. Btw, I think you are thinking things through, not rushing it. That's cool!
     
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  17. kierank

    kierank Well-Known Member

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    Exactly.

    I bought my first property 37 years ago (a PPOR but I had never heard of that term back then). I realise now I had absolutely no idea what I was doing. I was too scared to buy even though the place was positive cashflow (never heard of that term back then either). Rented a room out for $32pw, interest cost $15pw.

    We bought our first IP in 1992 (25 years ago). We realise now we had absolutely no idea what we was doing. We self managed and our first tenants were friends (no longer friends). This was the first mistake of many we made in property investment over the years.

    The longer one plays this 'game', the more one realises how little one knows and the more one realises how many mistakes one has already made.

    After nearly 40 years of buying property, I am still learning. Every time I think I am getting close to the top of this knowledge mountain, I bust through the clouds only to find out that I have reached the top of a small spur and I still have so far to go.

    Recently, my 30 year old son taught me something about property that I didn't know. WTF!!!

    Here is a quick summary of where I am:

    Am I a billionaire? No
    Am I a failure? No
    Would I be now where I am if I did nothing? No

    Do I know more now than when I started? Yes (lots)
    Have I still got more to learn? Yes (lots)
    Have I enjoyed the journey so far? Yes (lots)
    Have I made mistakes? Yes (lots)
    Have I ever been scared? Yes (lots)
     
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  18. ellejay

    ellejay Well-Known Member

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    I still get a sick feeling for a short time when I sign on the dotted line for an ip. However small the risk, something could go wrong and I've landed my family in strife. I push through it and push the doubts to one side. I can't know everything or control everythimg that happens. I've taken some massive leaps of faith and put trust in myself and total strangers (BAs). I'm alot better off for it and I serious think fear and inability to trust others (not meaning blind trust) is a hurdle you need to get over.
     
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  19. Ace in the Hole

    Ace in the Hole Well-Known Member

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    You don't need to be an expert to be successful.
    I've been on this forum, previously Somersoft, for 15 years now and still only know the basics.
    First IP after securing a PPOR was 7 years ago.
    I know absolutely nothing about what you mentioned in your first post - population growth, income growth, etc., or even what all the factors are, which are needed to be able to assess a location.
    It's all been about investing for convenience and gut feel for us.
    Will pick up a our first commercial soon which will bring us close to 20mil holdings.
    Never been into the analytical side of assessing deals and don't even know accurate figures, it's all back of the envelope calcs once in a while.
    Analysis paralysis is the killer of action.
    My advice, opinion only, is to not hire an advisor and do it yourself, you'll learn so much more in the long run.
     
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  20. NHG

    NHG Well-Known Member

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    The more you learn. The more you know what you don't know.

    As Ace stated. Analysis paralysis is the only major barrier to success. Action truly us where the learning is at.

    7 years on, 5 years after first purchase, I've gone back to basics and building myself back up. You will never know it all, there is no perfect deal.
     
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