Manage episode 285032358 series 1537109
Would you like to know where the property hotspots are going to be as Australia enters some semblance of normality in 2021?
Or maybe you’d like to know exactly where property values are going to end up at the end of this year.
Now I know that’s what a lot of the other podcasts are currently offering you, so I’m sorry if I’m going to disappoint you, but I’m not going to make any short-term predictions.
You only have to look back 12 months to see how all those short-term forecasts worked out, or even further back to the beginning of 2019 and again see how incorrect those predictions were.
On the other hand, it’s much easier to tell you what the value of well-located investment-grade properties will be in 10 years’ time. But that’s not as sexy, is it?
The problem is many investors take a short-term approach to real estate which is really a long-term investment.
They try and make a quick profit such as buying cheaply, or looking for the next hotspot, which is a short-term approach, and then wonder what to do next; rather than taking the long-term approach of owning the best asset they can which will give them long-term compounding growth and in time produce substantial wealth.
In today’s show we are going to continue on the discussion I started last week with Stuart Wemyss and work through his 8 fundamental rules for property investment.
These will serve you much better than learning where the next hotspot is going to be because as you know, this year’s hotspot will become next year is a not-spot.
When you understand these fundamentals and use them to formulate your investment decisions, you’ll be ahead of the game and be in that small group of investors who builds a multi-million-dollar property portfolio, rather than in that large group of 1.9 million Australian investors who never gets past their first or second property.
If you haven’t heard last week’s show, please listen to that after you’ve heard this episode – the order in which you listen won’t matter - just go to The Michael Yardney Podcast on whichever player you use to listen to the podcast because the two shows are complimentary – there was just too much information to pack into one show. And while you are there, if you don’t already subscribe, please subscribe to this show so you keep up to date as we enter an interesting year ahead.
Once you’ve listened to these two episodes, I believe you’ll be in a much better position to take advantage of the changing property market in 2021 as you understand Stuart Wemyss’s eight rules of property investment.
The Golden Rules That We Discuss This Week:
Golden Rule 5: Set your asset allocation to reduce risk and maximize return
Understand that you can’t predict what’s going to happen in the short term.
Invest in a combination of assets that diversify outcomes.
Be realistic about what long-term returns are going to be.
Golden Rule 6: Invest in the share market using low-cost passive investments
Two types of approaches: active fund management and passive management.
Golden Rule 7: Only invest in ‘investment-grade’ property
Three characteristics of an investment-grade property:
- Strong land/value component
- Have scarcity in terms of location and in terms of architectural style or building type
- Proven performance
Golden Rule 8: Protect your investments from expected and unexpected risks
Plan for the worst and hope for the best.
Make sure that you have the right insurance, including income protection insurance.
You need to put a will together.
You need access to several year’s worth of living expenses.
A finance strategist can help you put the appropriate buffers in place.
Links and Resources:
Stuart’s Book – Investopoly
Shownotes plus more here: 8 Golden Rules for building wealth in this new property cycle – Part 2, With Stuart Wemyss
Some of our favourite quotes from the show:
“Property’s lumpy, so it’s not easy to buy a property every six months or every six years.” – Michael Yardney
“Investing is meant to be boring, to give you the wherewithal to make the rest of your life fun.” – Michael Yardney
“The first rule summarizes it all, also. Invest for the long-term. Understand the long-term rules. Don’t invest for the latest hotspot.” – Michael Yardney
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