Twenty-one property investment lessons from 2021 you don’t want to forget

What’s ahead for our property markets in 2022?

Even though the situation is improving, there will clearly be continuing issues with Covid 19 affecting our local economy in the new year.

And the socio-political problems that plagued the world over the last few are unlikely to disappear.

Yet most analysts and economists agree that our property markets should perform strongly in 2022.

But the markets won’t be the same – capital growth won’t be as strong as we experienced last year, and we are likely to end up with a two-tier property market.

So, what lessons can we take from 2021 to make you are a better investor in the new year? 

Today I plan to share 21 lessons from 2021 with you, in the hope of making 2022 a better year for you.

Lessons from 2021 to carry into 2022

It’s been an extraordinary year, hasn't it?

Looking back to this time last year, we thought we had this Covid "thingy" licked didn't we, but look what then transpired.

Nobody could have foreseen all that’s happened, including the coronavirus, its economic fallout and the way our lives changed.

But as we head into 2022, I can’t help but reflect on what Australia as a country has accomplished and what I’ve achieved personally, what I’ve overcome, and the lessons I want to carry with me into the New Year.

1. Expect the unexpected

Every year an unexpected X factor comes out of the blue to undo the best laid plans – sometimes on the upside (like the miracle election result in mid-2019) and sometimes on the downside like Covid19 in 2020.

But the biggest risk is what no one sees coming, because if no one sees it coming no one is prepared for it and if no one is prepared for it, it’s damage will be amplified when it arrives.

2. Focus on the long term

The strong performance of both our property markets and our share market showed us to ignore the numerous pessimistic property predictions by the so-called “experts” - don't make 30-year investment decisions based on the last 30 minutes of news.

3. It’s the media’s job to entertain you – not educate you

Remember… it’s the media’s job to get eyeballs on the advertisers’ content, rather than to educate you.

And unfortunately, being overwhelmed with misinformation led many people to live in a state of fear and anxiety and caused some to make disastrous investment errors.

4. Take economic forecasts with a grain of salt

If you’re reading something frightening in the business section, or hearing it on TV, or learning about it from your neighbor, it’s almost certainly too late to act — because the information is already reflected in the market – in either the share price or property prices.

5. Don’t believe the Doomsayers

Last year, in 2020 at the beginning of the pandemic, the doomsayers found their moment and told us how our property markets would crash – they were wrong of course.

Don’t let them stop you from achieving your financial dreams – the doomsayers are always wrong, at least in the long term.

6. No one really knows what’s going to happen to the property markets

So as a real estate investor, while it’s important to have mentors, make sure you’re listening to somebody who has not only built their own substantial property portfolio but someone who has kept their wealth through a number of cycles.

7. There is no such thing as the “Australian property market.”

Local factors have always driven property market performance.

So, avoid paying attention to commentary that gives broad generalizations about the Australian property market or even the Melbourne, Sydney, or Brisbane property markets.

8. Don’t try and time the market

Rather than timing your investment purchases (or sales), if you buy the right investment-grade assets, time in the market is much more important than timing the market.

9. The crowd is usually wrong

Market sentiment is a key driver of property cycles and one of the reasons why our markets overreact, overshooting the mark during booms and getting too depressed during slumps.

10. Property Investment is a game of finance with some houses thrown in the middle

Maybe you should consider locking in a portion of your interest rates at today's low rates.

I'm not suggesting you try and time the interest-rate cycle, but I always lock in a portion of my loans on fixed interest rates to secure my cash flow.

11. Invest for Capital Growth

Capital growth should be the key driver for your investment decisions, rather than cash flow.

12. There will always be reasons not to invest

Where investors get into trouble is that rather than focusing on their long-term goals, they see these crises as a once-in-a-generation event that will alter the course of history, when in reality they are just the normal path of history.

13. Property investment is risky in the short-term, but secure in the long term

Those who stay in the game benefit from the power of compounding growth which builds wealth but takes time.

Many people get into property investment to improve their cash flow position, but if they don’t have good money habits to start with taking on more debt only compounds the problems.

14. Plan for the worst and look forward to the best

I've learned to protect myself and my investments because I don’t make forecasts - instead, I have expectations.

An expectation is an anticipation of how things are likely to play out in the future based on my perspective of how things worked in the past.

15. You can't rely on one stream of income

You've probably noticed that successful investors, business owners, and entrepreneurs enjoy multiple streams of income.

They strategically go to great lengths to make sure they have money coming in from all directions, or in other words "they don't have all their eggs in the one basket."

Sure, it's hard enough for some people to figure out how to create a single source of income, little loan multiple streams, but in my mind, you have no choice.

16. There are always risks associated with investing

Don’t be afraid of failing, because the biggest risk is not doing anything to protect your financial future.

Sometimes negative experiences, mistakes, and failures can be even better than success because they teach you something new which another win could never teach you.

17. Cautious optimism is better for your investment health than permanent pessimism.

Optimists are more successful in all areas of life than pessimists, or so-called realists. And this includes the realm of investing.

Those who have high expectations usually rise up to meet them.

18. Time is a limited resource – don’t waste it

We all have 1,440 minutes every day, but some of us squander it, waste it, or don’t use it efficiently.

On some level, most of us know that life is short, but 2020 taught us and solidified the fact that we don’t get a second chance and the importance of truly appreciating what and who we have in our lives whilst living to the fullest.

19. The only certainty is change

Changes are a normal part of life; the problem is most of us don’t like change – we like certainty.

The more I feel in control of the life my life, the more comfortable I feel and the better I perform in all areas of my life.

20. Worry Better

Worrying about the right things can motivate you, but if you find it unproductive, try to take your mind off things by getting engaged in other activities:

I was taught the concept of telling myself to put a limit of say 5 minutes or 10 minutes on my “worry time” and then forcing myself to move on by focussing on other tasks or engaging in other activities.

21. This too shall pass

How often do we need to hear the world as we know it is coming to an end before we realize that the world as we know it has not come to an end?

Now is the time to take action and set yourself for the opportunities that will present themselves in 2022.

Links and Resources:

Michael Yardney

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Shownotes plus more here: Twenty-one property investment lessons from 2021 you don’t want to forget

Some of our favourite quotes from the show:

“There’s always going to be somebody out there telling you not to invest in property.” – Michael Yardney

“There are just too many enthusiastic amateurs out there offering investment advice at present.” –Michael Yardney

“Remember, each property boom sets us up for the next downturn, just as each downturn sets us up for the next upswing.” – Michael Yardney

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