Why Property Investing Sucks for Becoming Rich??

Interesting read, you either take the long road or you become an active property investor and get there in shorter time frame. No right or wrong, however, I know which I prefer.
Buy to Let strategy.com

Why Property Investing SUCKS for becoming rich...

Extract:



Property Investing will make you rich – in around 20 years or so. If you’re young and committed, you’ll retire with more money than you ever had working a job. It can be fairly minimal time commitment on your part, and you’ll not have to worry too much about interest rates or taxes.


Rich people buy property. Property rarely makes people rich

There are a small handful of people who have made their money through property; founders of estate agents, founders of national house building companies… that’s probably about it. The rest of them have bought property with the millions they made elsewhere, or inherited the property in the first place.

The common thread with those who do make money through property is the fact they are in business, and their business happens to be property. They are selling a product or service on a massive scale. That is how most people make millions; they provide something for the masses.

Business makes money. Property protects money.

Property investment is the lowest risk, most passive, and highest returning investment vehicle I have found to store wealth.

By Property Investment I mean the boring, bog standard; purchase a property, pay down the mortgage (or have your tenant pay for you), and live off the income it provides.

If you are sensible and don’t over reach, if you have good numbers going in, if you manage your properties well, then the occasional market downturn won’t negatively affect you. Interest rate hikes won’t cripple you. You will be able to take advantage of drops in the market, and ride out the peaks with a smug grin as you see those around you losing their heads.

It won’t make you rich enough within less than a decade to retire from the 9-5 and live the life of luxury though.

So how do you get rich through property?
Work in a Property Business.

I don’t mean you have to work for someone else, but you have to WORK in or on a business. And work very, very hard.

Show me a millionaire who never worked long or hard hours and I’ll show you someone who was given their wealth.

The way to make Property into your business is to hustle and spend many hours on it. This is generally done through property or land development. For taking on the higher risk of Property trading, you are compensated with a higher return.

Setting up a business that services houses or the owner or occupiers of houses is another way to riches.

Why this matters…
A lot of people come to me looking for advice on how to achieve what I’ve achieved; retire after 10 years and live off passive income.

The honest answer is; take big risks, invest years and tens of thousands of pounds in training and mistakes, work at least two full time jobs for a number of years, and never lose focus or get distracted.

The idea that you can be an arm chair investor, keep your regular job (or not work at all), and become as rich as those who commit 100% of their time, effort and focus… well that’s just crazy talk. You can still become wealthy, but it will take you a lot longer going down that route.


Conclusion
So if you’re looking to become a property investor, then accept the path this is going to take you down. It’s great! But it is supplementary to your source of income for a long time.

If you want to retire quickly and live off passive income, then you need to make your money through another method than just buying properties to rent out. You can make the money through property development, or in the service side of property, but just remember that it is a very different beast.

 

Great comment @MTR (I take it this is your comment and not the article?). Yes, to make money (in a decent timeframe), turbo boosting is required. PI is not about buying a solution and thinking it will serve you. Analysing markets to jump into a rising market will take you so far, but solving someone's problem - renovating an unloved house, to providing more properties in an area (building an apartment complex, townhouse or a house), will deliver the goods in the PI game.

 

I agree make money in business - hold it in real estate, gold and silver.

You can make money in real estate too through timing - you invest in time, and creating equity through developing, renovating - which is actually a business.

 

Waiting 20 years to retire from property, sucks big time, and it means you will be riding the boom/bust cycles.

Its very much hit and miss if you buy the garden variety properties and hoping for growth, and determining this purely by historical data which does not necessary guarantee you will achieve the same or just dumb luck who knows??

I can never understand why investors don't take control rather than wait in hope. All to their own I guess

MTR

 

the words "retire on property" do not make sense. People say that a lot here. It means nothing - if you are making money on property you can't be "retired"

 

My personal life motto is that "Hard work prevails over a genius" but of course if the genius person decides to match your intensity and efforts, it's going to be really hard to catch up to him or her.

I think a great documentary which I'd recommend for people to watch is "Jiro dreams of sushi" of a sushi maker who consistency worked on his craft tirelessly day in and day out.

JIRO DREAMS OF SUSHI is the story of 85-year-old Jiro Ono, considered by many to be the world’s greatest sushi chef. He is the proprietor of Sukiyabashi Jiro, a 10-seat, sushi-only restaurant inauspiciously located in a Tokyo subway station. Despite its humble appearances, it is the first restaurant of its kind to be awarded a prestigious three-star Michelin Guide rating, and sushi lovers from around the globe make repeated pilgrimage, calling months in advance and shelling out top dollar for a coveted seat at Jiro’s sushi bar.

 

Property is an excellent store of wealth, it's not good by itself to create wealth unless you want to take decades to see a result.

A lot of people ask where to buy? Simple, easy, Just buy anywhere there is industry, jobs, cafes and a growing population. If the economy and credit conditions stay favourable then prices will rise. It's not rocket surgery. Rocket surgery is getting yourself in a position where you can create a strong income via your career or a business so you can then build your monster portfolio and feed it. There is no guru or spruiker who can teach you this because it's not a quick and easy fix, nothing sexy about it. Takes time, commitment, risk.

 

... then there is also the idea of developing property, it can be very simple and very low risk

Start with a house where you can build a new property at rear, sell the front, use those proceeds to develop the rear, hold the rear property and it will be very likely be cash flow positive, deprecation maybe $7K pa and then tap into the equity.

Once you master this you will be well on your way to use this strategy as a way of continually generating income streams.

MTR

 

watched the doco on Jiro, it was great

 

Made most of my money with business, and real estate was the product. Also store wealth in real estate.

I'd never expect to make mega dollars with buy and hold in a short period of time. For every 1 person lucky enough to do that, 1000 more will be struggling to get past 3mil.

The formula which has worked for me is Business X Real estate = massive wealth potential

 

A person earning $50k per year in their job and consistently puts 10% of it in the Bank - will never get rich.

If that same person consistently puts that same 10% into affordable investment properties, employs the various tax incentives associated with it, and reinvests the profits back into those investments, or uses those profits and/or investments to leverage into other income producing investments - they can become reasonably rich.

 

I think it means that you can retire from your PAYE...which most would love to be able to do.

 

But it just got a little harder, sourcing finance is just another stumbling block.

Government is not our friend, they are looking at ways to screw the property investors, slowly but surely we will see some changes which will chip away at our returns.

My thoughts - buy and hold strategy is not going to work that well moving forward, the cost of holding property will rise and unless investors start tweaking their strategy they will spend most of their life talking about wanting to retire, but they will probably be closer to retirement age before this eventuates.

MTR

 

Same would apply to putting 10% into super though they would be marginal on whether there'd be a tax saving as the MRT is just over 15% not including Medicare levy.

 

What's wrong with 20yrs?

I started in my 20s and now I'm doing ok.
Always did what i want and been my own boss.
My net worth gain has been around 20% pa for the past 25yrs (yep better than Buffet) and unlike many here I done nothing special, not a builder or tradie, and never been a high income or exec.

 

Putting 10% of $50K ($5K) into property doesn't seam feasible. What would $5K per year get someone? (I'm not being antagonistic - I just don't understand how this would work).

I imagine that they'd need to have a lot of equity already, and not have to borrow much (which, if only earning $50K per year, doesn't seem very likely either).

 

that's great, but 20% profit pa over 25 years is anything but normal.

 

Are you sure ?

 

20% pa average over 25yrs is what I worked it out my Net worth increase to be.
A few re-zonings helped. This was part of the plan.
And a BIG mistake (equivalent to the value 1 IP out west) hindered a bit as well.

PS Remember when you could buy a 3B LUG in Coombabah for $140-160k and rent it out $200-220?
The time the whole RE world was saying "never invest in SEQ"?
I was there too...