Property Investment, Success & Money | The Michael Yardney Podcast

Have you thought about investing in commercial property? You're not alone — faced with the prospect of more moderate returns from their residential property investments, many investors are considering this as an alternative. By this, I mean offices, shops or warehouses. In today's podcast, I'll be exploring the benefits of investing in commercial property, as well as some of the negatives. Benefits of commercial property There are of course many benefits from investing in commercial property Strong returns — Over the years commercial property has provided strong returns as a combination of capital gain and income. Stability of income — One of the important features of commercial property is returns are generally high and more secure. Returns for property fluctuate considerably less than returns on shares. Low risk — There is less volatility in the value of commercial property than in shares — if you own the right property. Exposure to different sectors of the economy — Retail and industrial properties have a direct relationship to the general state of the economy. Retail property depends upon consumer spending. Tax benefits — Commercial properties provide generous tax benefits with substantial depreciation allowances. Some buildings also attract building allowances, where a portion of the structural cost can be offset against the assessable income. Hedge against inflation — The value of commercial property and rentals of commercial properties have outpaced inflation over the long period. Investment control — As the owner of commercial property, you have a significant degree of control over your investment. You can choose to do improve your return through renovations, upgrading, and change of the use of the property, or you may amend the terms of the lease or the type of tenant you have and you always have the option of further development of the property or dispose of it. Leverage — Just as with residential properties it is possible to leverage your returns by borrowing up to 70% of the value of commercial property. Adding value — Just as investors in residential property are able to add value by buying a run-down property and renovating or redeveloping it, there are opportunities in commercial property to add value. In particular, if you can increase the rental income from your property this will directly reflect on the valuation of the property. Ways you can add value to your commercial property investment include: Renovating Upgrading Subdividing or enlarging the block Improving the appearance of the property Obtaining permission for redevelopment Renegotiating the lease Changing its use for example to residential The negatives of commercial property Some of the disadvantages of investing in commercial properties include: Lack of liquidity — Selling a commercial property can take several months — often longer than it takes to sell a well-located residential property. Lack of pricing information — Compared to residential property there is little pricing information available for investors in commercial property. It is, therefore, more difficult to know the value of your particular property. You may able to get some information from the Property Council of Australia or from the following websites https://www.commercialrealestate.com.au/or http://www.realcommercial.com.au Scarcity of other information — If you are interested in share or in residential property, there are many blogs, magazines, newspapers, and websites that will help keep you informed and make you a better-educated investor. There are very few information resources for people interested in commercial real estate. You will find some articles in the Australian Financial Review and in the reports produced by some of the larger commercial property agencies. Higher costs — The entry level to purchase a commercial property is usually higher than that for residential. Partly because the price of a good commercial investment is substantial and partly because you require a larger deposit as banks won't lend you as high a proportion of your property compared to residential real estate Ongoing management — Direct property investment in commercial properties can require your ongoing management but usually requires less management than similarly priced residential properties. Links and Resources: Michael Yardney Metropole Property Strategists Metropole's Strategic Property Plan – to help both beginning and experienced investors Commercial Property Investment Guide Ahmad Imam - Metropole Properties Sydney Some of our favourite quotes from the show: "My mistake was doing it a bit too early because I didn't recognize at the time that while I got good cash flow, I didn't get much capital growth." –Michael Yardney "As a commercial investor you need to come up with more equity, you need more cash in your stash to get going." –Michael Yardney "In general, commercial investors are looking for the security of the lease." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

The 7 Major Benefits of Taking Your Business to Level Three It's well worth investing your time, energy, and resources to build a thriving Level Three business. When you do, here are the seven tangible benefits you'll get: It gives you control over your financial future. It will massively increase your net worth. Your business is much easier to scale. You earn your freedom from your business. A Level Three business gives your staff security and growth opportunities. Your business is dramatically more stable. You have a greater impact on your market. So, let's look at 4 myths that hold people back building a level 3 business Myth 1: It's too risky. Is starting your own business really so risky? Let's look at the facts. Fact: According to most credible studies, a generic business start-up that has at least one employee has a roughly 70 percent chance of still being in business after two years (the way most studies define "success" for a start-up business). More than 50 percent are still in business after five years. And these numbers are misleadingly low in most instances. Why? Because the data doesn't account for businesses that close for legitimate reasons other than "business failure"— reasons such as health issues, the desire to start a new business, or other personal reasons. These statistics are a source of encouragement. After all, if 70 percent of new business owners can succeed through the first two years and at least half make it through year five, imagine how much better your odds are when you tap into the support, training, and input from resources such as the Business Accelerator Mastermind community. Myth 2: It will consume your life. Yes, launching a new business is intense. So are the Level Two years of establishing, grooming, and growing your company. But when you understand the Level Three Road Map, you see that as you grow your business, you not only can but must build it to be increasingly less dependent on you. That's why we're encouraging you to build a business, not a job so that over time you can transition your business away from needing you on a daily basis. Myth 3: You've got to stay in control. Control is a trap that will wrap your business around you, making it grow progressively more dependent on you. Instead, learn to build your business with the systems, team, controls, and scalable solutions in place that enable it to operate independent of your autocratic control. Myth 4: It takes a lot of money to launch a new business. In the past it did take quite a bit of capital to establish a new business. But technology has changed the playing field, giving new-comers easier and less expensive access to businesses than at any other time in history. Links and Resources: Metropole's Business Accelerator Mastermind Mark Creedon – Business Coach to some of Australia's leading entrepreneurs Some of our favourite quotes from the show: "I am still involved, because I enjoy it, because I'm having fun." –Michael Yardney "I guess one of the reasons many of us get into business isn't just to have a job to get money, but to leave an impact, leave a legacy on your community and on the world." –Michael Yardney "Hard work isn't going to be enough to get you out of the rat race." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how.

There are so many predictions about what's going to lead to property price growth in the future, but today with Pete Wargent, I'm going to explain to you a demographic tsunami that's going to change our property markets, and one that you really must understand if you want to own the sort of property that's going to outperform in the future. I'm also going to discuss the 7 signs of a shonky property guru. This came from a game I played over the weekend. Listen in to find out more. Then in my mindset moment, I'll explain why being rich is a choice. Yes you have a choice. If you want to, you can become rich, and I'll explain how. This demographic Tsunami will change our property markets There's no shortage of housing forecasts at present, and many of them are a bit scary. And what this means is that many investors are making decisions based on the media instead of the fundamentals. But there's one big driver, a veritable tsunami that the property pessimists seem to have forgotten. It's not our economic growth and it's not jobs growth, it's a demographic tsunami that's going to hit us according to Pete Wargent. Sydney, Melbourne, and Southeast Queensland take up the big chunk of the population growth, about 400,000 per annum Because Australia's visa programs are tilted to the under-30s, there's an enormous surge of people in the 25-34-year-old age bracket, the typical first homebuyer age Population growth is important, but so is household formation Many first homebuyers will initially live in apartments Younger people are congregating in the inner suburbs, especially Sydney and Melbourne Younger people want to live in modern accommodation that is close to amenities and lifestyle, but not in high-rise towers Owner-occupiers drive the market and investors create the booms in-between Australia's population is headed toward about 30 million over the next decade up from 25 million Trends that are going to drive property values up over the next decade: Close to amenities Municipalities where gentrification is occurring Walkability Easy access to public transport The rise of electric vehicles Melbourne will overtake Sydney in population over the next decade 7 Signs of a shonky property guru They tend to brag about their achievements and talk themselves up They claim their "secret techniques" can work for anyone They don't warn you about the risks or the possibility of failure They say you can get involved in property with little or no money Their testimonials sound too good to be true They pretend to be mentor when their aim is to sell you property They suggest you can amass a large number of properties in a short period of time Links and Resources: Michael Yardney Metropole Property Strategists Metropole's Strategic Property Plan – to help both beginning and experienced investors Pete Wargent Some of our favourite quotes from the show: "In the middle is where a lot of people are going to want to live." –Michael Yardney "Over the years I've learned that becoming rich starts with something as simple as the thoughts that you put in your head." –Michael Yardney "The minute a guru starts mentioning how successful they are, how wealthy they are, how happy they are, my alarm bells tend to go off." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

If you want to become successful at anything, whether it's property investment, business or entrepreneurship, a great strategy is to find yourself a mentor – someone who's achieved what you're wanting to achieve and study them, learn from them and emulate them. You can learn from their successes as well as their failures. In fact it's much cheaper to learn from your mentor's mistakes So please allow me to be one of your mentors. You see…I frequently get interviewed on the radio, television and on podcasts. And today I'd like to replay an interview that brought out a lot of great information about my youth, my successes and also the things I've done wrong. As I said…if you can learn from other people's mistakes, why not do that instead of making these yourself? Mike Mortlock from MCG Quantity Surveyors interviewed me for his podcast. This show is about double the length of our normal show, but there's a lot of good information there that both new and returning listeners will benefit from. Some of the topics we discuss during the interview How I got interested in property My first property What led me to start the Metropole Group of Companies How finding mentors and learning from mistakes helped me create the business that I have today Some of the mistakes I've made Patterns I've learned in the property cycles Strategies that I have used in my real estate investment journey Which locations are going to outperform in the long run Why investors should think like home buyers What opportunities exist for potential investors with limited budgets How long it really takes to become financially independent Some strategies for new investors Difficulties with getting financing when you have several properties A mistake that I sees property investors frequently make How investors can use renovations to add value Why behavioural finance and investment psychology are important subjects to understand How biases affect financial decision making The services that Metropole offers Links and Resources: Michael Yardney Metropole Property Strategists Michael Yardney's Mentorship Program Mike Mortlock MCG Quantity Surveyors Some of our favourite quotes from the show: "I'm actually a real success at failure. I guess there's been tenacity to keep going." –Michael Yardney "The good and the bad times are keep coming, so be prepared for them. Maximize your upside and be prepared to cover your downside." "One of the big lessons of successful investors, business people, is to delay gratification. Wealth is the transfer of money from the impatient to the patient." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how.

In today's show, we're going to talk about the future of our property markets. It's important to understand what the markets will be going over the next five, ten, or fifteen years and what sort of properties will be in continual strong demand so that they outperform the averages. I'm going to do talk about that in two separate segments. Firstly I'm going to explain an important factor shape our futures, and it's not the normal demographics I talk about. You'll be surprised. In the second segment with Dr Andrew Wilson, we're going to talk about the apartment markets. Because we've had a building boom in apartments, many people said we had an oversupply that was going to lead to a crash. In some segments of the market that didn't occur, but in other segments it did. Also, in my mindset moment, I'm going to tell you about the first car, and what that has to do with success and money. This will shape the future of our cities I'd like to have a chat about one of the major factors that's going to shape our cities and property markets in the future. Property investing is a long-term game, and you want to own the kinds of properties that are going to grow at wealth-producing rates of return in the future. Many people are saying that we can't have the same sort of capital growth that we had in the last 10-15 years over the next decade or so. It's just not possible. There are so many factors that could be involved that I don't want to predict exactly what capital growth will look like in the future. But I do want to suggest that what we should be looking for are properties that are going to outperform the averages. The significant growth in our capital cities over the past couple of decades came about because of two major factors: A significant drop in interest rates Many households moved from single income to two-income households What's ahead in the future? A period of significantly lower interest rates, at least for the next decade Wages growth will remain low, despite strong job creation and low unemployment levels Despite business profits and the low unemployment, wages are not going up. Workers are not only taking home less money, but they're getting less bang for their buck. I see some major workplace changes on the horizon. A lot of existing jobs won't be needed in the future. More and more jobs will be done by fewer people. An accelerated hollowing out of the middle class There will be more lower paying jobs, temporary jobs, and casual jobs. Don't blame Big Brother or the government, though. A lot of this has to do with Artificial Intelligence coming. A lot has to do with offshoring of manufacturing and other jobs. But it's all changing. Michael Matusik created a great table where he explains the difference that he sees amongst the distribution of different jobs in Australia moving forward. He classes people as being either high-income earners, low-income earners, or middle-income earners. The trends are more important than the exact figures, but he suggests that over the last 25 years or so, 30 percent of us were high income earners, but it's actually dropped to around 25 percent now and will drop to 20 percent over the next 25 years. Middle-income earners were around 50 percent in the past, but have dropped to 40 percent and will continue to drop to around 30 percent. Meanwhile, low-income earners previously made up around 20 percent of Australians now make up around 35 percent and will increase to around 50 percent. Michael writes that 47 percent of existing jobs could be obsolete by 2030, and that demand for the remaining jobs will be halved over the next decade. And most of the jobs affected will be in the middle and higher wage levels. So what does this mean for the property market? Where are property values going to increase at above average rates of return in the future? It's going to be in those locations where people's wages are high and their disposable income is high. There's going to be very little impetus for people to buy more property or add to their homes in the outer suburbs and the lower income areas where people's wages aren't rising, which means properties in those areas aren't going to go up much. On the other hand, in municipalities where people's wages are rising, they'll have more disposable income. They'll buy more new houses and renovate more houses, increasing the property values. So, the factors that are going to shape the property markets in the future are: The jobs people have The disposable income they have Their ability to pay to live in the locations where they want to live. The State of our apartment markets More and more Australians are trading backyards for balconies. They're happy to live in apartments trading space for place – they want to live where the action is. In fact, the wave of apartment construction has changed the shape of our cities. Not only in the CBD and near CBD suburbs, but new apartment blocks have spread to the middle and even outer suburbs. Some say Sydney and Melbourne have Manhattanised. Have we been building too many apartments? Are we building the wrong type of dwelling? Is the oversupply causing a crash like many predicted? And what's ahead for our apartment markets? That's what I discuss today with Dr Andrew Wilson in this week's Property Insiders chat. Listen as we discuss: The unprecedented apartment boom of the past 5 years in most capitals which has now clearly ended. This has implications for undersupply in the coming years. Although record levels of apartments have been built in recent years, the unit market continues to outperform houses. Doomsayer predictions of oversupply and sharply falling prices have unsurprisingly proven to be false – in particular, Brisbane where apartment prices and rents are rising and vacancy rates continue to fall. The sharp decline in unit construction has significant consequences for the economy which has benefitted from the recent boom that has offset the end of the mining boom and the depletion of the manufacturing sector. Demand for units is set to accelerate from a more diverse buyer profile as apartment living emerges as a preferred lifestyle for many The peak of the supply cycle has now been reached in Melbourne and Sydney and predictably sales are relatively scarce exacerbated by misguided lending policies to investors, restrictions on Chinese buyers and general fragile sentiment Tighter planning restrictions for apartments, particularly in suburban areas will exacerbate the emerging undersupply NIMBYS and NOTES Missing middle Latest approvals data shows some early signs of a revival in unit buildings Links and Resources: Michael Yardney Metropole Property Strategists Metropole's Strategic Property Plan – to help both beginning and experienced investors This will shape the future of our cities Some of our favourite quotes from the show: "Don't blame big brother, and don't blame the government, a lot of this has to do with artificial intelligence coming, a lot of this has to do with offshoring of manufacturing and other jobs, but it's all changing." –Michael Yardney "The lesson for you and me is: you don't always win. But every time you lose you get stronger." –Michael Yardney "Nothing is as painful as staying stuck where you don't belong." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Why do the rich keep getting richer? What do the rich do differently? Being rich has little to do with money itself, but it has a lot to do with how you think about money. If you want to become rich, one of the first steps is to know how the wealthy think about money and act around money. We've been doing a continuing series on the success habits of the rich. Listen to today's episode to learn about even more success habits of the rich. 10 More Success Habits of the Rich Successful people ask the right questions – questions which put them in a productive, creative mindset and a positive emotional state. They understand that the better the questions they ask, the better the answers they get and the better the results they achieve. Successful people have clarity and certainty about what they want (and don't want) for their life. They actually visualize and plan their future while others are merely spectators of life. While the poor believe rich people are lucky, the Rich know luck has nothing to do with their success. The Rich are voracious life-long learners. They constantly work at educating themselves, sometimes formally and academically; but more often informally by asking, watching, reading or listening and also experimentally by doing, trying, failing and trying again. Successful people are glass half full people – while still being practical and down-to-earth. They have an ability to find the good in everything around them rather than look for faults, problems or stumbling blocks. Putting it another way…the poor focus on obstacles in their way while the Rich focus on all the opportunities all around them. While many people are pleasure junkies and avoid pain and discomfort at all costs, successful people understand the value and benefits of working through the tough stuff that most others avoid. The poor believe they aren't worthy of wealth, while the Rich believe they deserve to be rich. Successful people are adaptable and embrace change. They are comfortable with and embrace the new and the unfamiliar, while the majority of us are creatures of comfort and habit. The poor often resent successful and rich people (you know what I mean…they're waiting for the property market to collapse on those who've worked hard to buy an investment.) On the other hand, the Rich admire other rich and successful people. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Some of our favourite quotes from the show: "I think the rich people recognize that they're lucky because they've worked hard and they made their own luck." –Michael Yardney "It's not just reading, I guess, when we're talking about educating. It's listening to podcasts like this, it's watching videos, it's reading blogs as well." –Michael Yardney "Most of us don't like change to some degree because it's uncomfortable. The more in control you are of all elements of your life, the better you feel. But change is going to occur, so why not be adaptable?" –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how.

Warren Buffet, often called the Oracle of Omaha is a font of wisdom. He is perhaps the most successful investor in history. So, he knows a lot of lessons we can all benefit from. In today's show we'll dissect 19 life-changing lessons from Warren Buffett. 1."Risk comes from not knowing what you're doing." 2."Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." Many investors don't review their portfolio – they think their underperforming investment isn't costing them anything 3."It is not necessary to do extraordinary things to get extraordinary results." Property investment is simple – but not easy – buy a high growth quality asset and hold it for the long term So many people delay investing because they think they need to understand how it all works or to have lots of money before they can get started. You don't. Just do it. Do it now. Time is ticking, and the most powerful force in personal finance is compounding interest, but it needs time to work its alchemy. This quote is accurate for lots of aspects of life. You don't have to do an extraordinary amount of exercise to improve your health nor do you have to be an extraordinarily gifted athlete to get started. You don't have to be extraordinarily attractive or have an extraordinary game to ask that cute girl or boy out and find extraordinary love. To get extraordinary results, you just have to do a lot of normal things in the right direction. 4."After all, you only find out who is swimming naked when the tide goes out." Look what's happening in the property markets now – a rising tide lifts all ships, but what happens when the tide goes out? 5."Price is what you pay. Value is what you get." 6."It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." 7."The investor of today does not profit from yesterday's growth." Look for leading indicators, not lagging indicators Some extreme examples are mining towns, Perth and Darwin The same will be said about Hobart in a few years' time 8."It's better to hang out with people better than you. Pick out associates whose behavior is better than yours, and you'll drift in that direction." One way to make yourself better is to spend time with people better than you. At whatever it is you want to be better at. If you want to get in shape, join a running or cycling club. If you want to eat better, only eat with people who already eat well. 9."It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." 10."Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars." 11."If you get to my age in life and nobody thinks well of you, I don't care how big your bank account is, your life is a disaster." 12."I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over." Small improvements, over time, can make a monumental difference to your habits and your life. 13."You only have to do very few things right in your life so long as you don't do too many things wrong." No one can be good at everything all the time. Everyone can make mistakes. But what you are good at and where you make your mistakes is what counts. If you invest early and often, you don't have to have a big, impressive career making tons of money. 14."Rule No.1: Never lose money. Rule No. 2: Never forget rule No.1." 15."I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful." When people get greedy, prices go up. When they get fearful, the prices go down. If you follow the herd and get greedy, you are likely to overpay for something that has an inflated value. If you go against the herd, you can get a great deal. 16."Our favorite holding period is forever." "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value." 17."Never invest in a business you cannot understand." 18."Someone's sitting in the shade today because someone planted a tree a long time ago." Long-term thinking (and investing) and planning allow us and others to reap the rewards in the future. If you saved up $500 and opened a Betterment account today and added another $500 a month ($6,000 a year) and earned an average of 7% for the next 20 years, you would have more than $265,000, over a quarter of a million dollars! If you got a late start and doubled those dollar amounts, $1,000 to start and $1,000 a month ($12,000 a year), but halved the amount of time to ten years, at the same 7%, you would have just over $179,000. There is no substitute for planting that tree early. 19."Diversification is a protection against ignorance. It makes very little sense for those who know what they're doing." The bottom line: These Warren Buffett quotes are nearly all common sense. He doesn't claim to be smarter than anyone else (although he is), he just sticks to common sense and some core principles when he invests. We should all be like Warren. Links and Resources: Michael Yardney Metropole Property Strategists Metropole's Strategic Property Plan – to help both beginning and experienced investors Ahmad Imam - Metropole Properties Sydney Some of our favourite quotes from the show: "Many investors think they understand about the property market because they know a little bit about the home that they've lived in or interest rates, but that's a risk because they don't understand the nuances of what creates property markets to move, to change… what drives property markets." –Michael Yardney "If you can only own three or four investment properties, shouldn't you be owning the best ones?" –Michael Yardney "There's no real way of getting something way, way below market price, because if it is, it's likely there's something you're missing." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

In today's technology age, property forecasters are armed with all of the information in the world. So why do they keep getting property market predictions wrong? That's one of three topics I'll be discussing in today's show. I'll also be talking about some recent statistics that explain a segment of the property market that you really want to avoid. This is one area of the property market just doesn't work. Additionally, in today's mindset moment, I'll talk not about being successful, but about why you should embrace failure. These stats show why you really must avoid off the plan apartments You've heard me say it before, but now the stats prove my point. Off the plan apartments make terrible investments! Analysis by BIS Oxford Economics reports that of the apartments sold off the plan during the past eight years: Two out of three Melbourne apartments have made no price gains or have lost money upon resale. And this is despite record immigration and a significant property boom. In Brisbane about half these apartments bought off the plan are selling at a loss, or at no profit. In Sydney, it is about one in four apartments bought since 2015 are selling at a loss, or at no profit. In other words, more investors in off the plan high rise apartments have lost money than have made money. And of course, there are all those investors sitting on the apartments which are continuing to fall in value, but they haven't crystallised their loss yet. In 2018, 98,000 apartments were completed across the country and 65,000 in NSW alone, according to ABS figures and the situation is only likely to worsen considering the pipeline of projects still being completed. According to the BIS research, resales of apartments within a three to five kilometre of central Sydney, Melbourne, and Brisbane have realised consistently lower prices than established apartment resales. To make things worse... Today with falling property values a large portion of these off the plan apartments are completed they are valuing in at less than contract price at a time when nervous lenders are demanding a bigger deposit from buyers. This double whammy will result in more off the plan investors having difficulty settling their purchases leading to rising defaults on settlements and major discounting by investors trying to get out of their purchases and developers trying to move their stock. According to RiskWise, Brisbane's inner-city apartment market has about 10,000 more homes in the pipeline than it should have, suggesting the city is expected to face more defaults on settlement. And there are long term problems as well... There is no doubt that all those off-the-plan residential property developments have redrawn the skylines of our capital cities and many parts of inner and middle suburbia over the past decade. The spread of high-rise living out of our CBDs to adjacent suburbs as well as into outer lying suburban strips has been remarkable. But... Many of the tiny inner-city apartments built during the boom of the past decade are unlikely to meet the needs of Generation Y as they grow older. Sure more and more of us want to live in apartments - but not ones that are so small and ones that lack amenities Poor construction techniques, particularly the use of inflammable cladding, will devalue many apartment blocks. The high-profile structural problems of the Opal Tower is likely to be only one of many stories of building defects But the biggest risk for off-the-plan units are the proposed changes to negative gearing and capital gains tax if Labor wins government. How investor mindset moves the markets If they're armed with all the research available in today's information age, why can't economists agree on where are our property markets are heading? In fact, a better question would be – why do so many get it wrong? The simple answer is that market movements are far from an exact science. The fundamentals are easy to monitor. Things like population growth, supply and demand, employment levels, interest rates, affordability, and inflationary pressures. However, one overriding factor that the experts have difficulty quantifying is investor sentiment. And that's what's really been behind market movements of late. I've found that investors often suffer lapses of logic when investing and many of their investment decisions are driven by emotion. For example, we tend to extrapolate the present in the future. When things are booming, we tend to think the good times will never end and when the market mood is glum, we have difficulty seeing the light at the end of the tunnel. Think about it…when the media is full of reports about property prices falling and an impending housing crash, many investors become scared and sit on the sidelines, believing the end of property is nigh and things will never improve, when in reality much of the risk has been removed from the market. Conversely, when property markets are booming and stories of investors seemingly making large gains overnight abound, people want to jump on the bandwagon and cash in, often at a time when the market is near its peak. Other emotional traps include becoming overconfident, wishful thinking and ignoring information that conflicts with your current views. In other words, many investors make their own "reality." Can you see how investor psychology, drives booms and busts? Can you see how the dominant investor mentality of the time helps drive the property cycle? Just to make things clear…homebuyers, who make up around 70% of property transactions drive our property markets. But investor activity creates our booms and busts. Simply, a few years ago investor frenzy driven by Fear of Missing Out drove the property markets in Sydney and Melbourne to dizzy heights. Now that investors have put on the brakes, property values are falling. But in due course, they'll jump back into the market, demand will rise and so will prices. Obviously, one or two misguided investors won't be able to influence property prices, but investor psychology is infectious. People tend to want to do what others are doing - they 'follow the herd' because going against popular opinion is perceived as risky. What if you make a mistake? What if "the crowd" is right and you are wrong? This behaviour stems back to the days of our ancestors when it was safer to remain part of the herd rather than leave the security of the pack and be eaten by a Saber-toothed Tiger. This "herd behaviour" is magnified by several things including; Mass communication and social media bombarding us with messages and facilitating behaviour to become infectious. When we hear that real estate is doomed, all but a handful of sophisticated investors get scared out of the game. And when the media tells us our property markets are booming, everyone wants a piece of the action. Pressure to conform. If your friends or family are doing it, it must be right. Right? Human nature makes us reluctant to do the opposite of what our peers are doing. A general belief that grows and spreads. Every cycle there is a new generation of uneducated investors who have not experienced the cyclical nature of our property markets and they are (mis)led to believe that property values can only go one way, and fueled by property marketers and spruikers they enter the market pushing up prices, perpetuating the belief and helping make it a reality! Similarly, when the herd believes the market is going to crash, they steer clear, this gets reported in the media and the negative sentiment feeds on itself. These "lapses in logic" by individual investors and the magnification of such lapses by crowd psychology feeds property cycles and goes a long way in explaining why we're experiencing the current property slump, despite the strong underlying fundamentals. When investor sentiment is positive, the crowd jumps in feet first, pushes up demand and places upward pressure on prices – causing boom conditions. Conversely, when sentiment is negative, the crowd backs off and frequently sells out of the game due to concerns that they're about to lose everything – causing slumps or bust conditions in the marketplace. The best defence is to be aware of past market cycles (so nothing comes as a surprise) and to avoid being sucked into booms and spat out during busts. Of course, for those with a long term perspective, and that's the only way to invest, buying property today when others are fearful is a smart strategy. I've always been an advocate of counter-cyclical investing. This approach is commonly taken by savvy investors who have come to understand that moving against the crowd often produces the best results and can mean the difference between outstanding gains in the property market and average ones. Sure, it takes some courage to do the opposite of what everyone else is doing, but the results of your contrary behaviour will ultimately speak for themselves. Links and Resources: Michael Yardney Metropole Property Strategists Some of our favourite quotes from the show: "Flats, the older apartments, the established apartments, have perfromed better than new apartments." –Michael Yardney "But here's the thing, we're all going to fail at some point, whether it's a succession of small errors or one monumental disaster." –Michael Yardney "Nothing puts things in perspective or keeps our egos in check quite like a run of bad luck." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how.

The nation's housing markets are set to be reignited with a stimulus package focused on winding back lending restrictions and lower interest rates fuelling economic growth, in tandem with tax cuts and increased infrastructure spending. While these are positive moves that will instil confidence, there are still some underlying issues that need to be discusses and that's what I chat about in this week's Property Insiders show with Dr Andrew Wilson. Listen in as Dr. Wilson discusses the Big Three Macro Drivers that now point inarguably to a rate cut… 1.Wages Along with most other advanced economies, Australia's has failed to ignite wages growth over recent years despite the lowest interest rates on record and a strong labour market performance. This has been a severe constraint to consumption and overall economic growth. Latest data shows no sign of a revival in wages what remains low and stagnant growth. Inflation Low wages growth and weak consumption has logically constrained prices growth which has remained well below the RBA target range of 2-3% annual growth for years now. The latest data shows inflation now flatlining. Jobs With the jobless rate having risen to 5.2 per cent last week, but employment also stronger with 28,400 new jobs created in the month of April, a dilemma has formed for the RBA on how best to interpret such employment data. The RBA has remained stubbornly fixed to the theory that low unemployment and strong jobs growth will lead to incomes and prices growth. The national labour market after a lengthy period of strong performances is now starting to deteriorate, influenced clearly by the anti-housing market and anti-residential development policies of the Reserve Bank and APRA the financial regulator. This is the now the final straw for the clearly belated RBA backdown on predicted rate direction, with wages and prices still dormant with the labour market now showing clear signs of deterioration that are likely to be sustained. Things are clearly looking up for the Australian housing market Watch the video of our chat here: Are our housing markets set to ignite? Property Insiders VIDEO Dr. Andrew Wilson – www.MyHousingMarket.com.au

Australian property markets are in a slump and the media is full of stories and headlines full of doom and gloom. Is the media just reporting on the property market downturn? Or are they helping to create it? That's one of the topics I'll be discussing with Dr. Andrew Wilson in this week's Property Insiders chat. Listen in to get a better idea of what's going on in the background in the media and in our property markets. But first, in my mindset session, I'm going to share with you five mistakes that a lot of people make that prevent them from becoming financially free. While getting financially free is about the money, it's more about the money habits that many people have. You might have them yourself or know other people who have them. These habits are what stop people from achieving financial freedom. The top five 'financial mindset mistakes' you're probably making Becoming financially free is about your habits. It's not about getting lucky at the Casino one night or a spectacular financial investment that went your way. It's about making good decisions, day in and day out, and continuing to make those decisions over a long period of time until it becomes a habit. This means following a few rules on what we allow ourselves to think and dwell upon. If you can avoid adopting any of the following common mindsets, you'll already be ahead of the game: MINDSET 1: Relying on a wage to get wealthy MINDSET 2: Thinking investing is too hard MINDSET 3: Thinking money just causes problems MINDSET 4: Thinking you don't deserve it MINDSET 5: Being afraid of making a mistake Ask yourself: have you ever fallen into one of the above mindsets? I bet it's held you back. The good news is that there's always time to change your mindset. Money doesn't discriminate – it doesn't care who owns it. So why not have your share? Is the media creating the current property downturn? We're suffering a crisis of confidence and in my mind, the media has a lot to answer for. Is the media reporting consumer sentiment or is the media's negative sentiment creating a crisis of confidence? You can't buy a paper or go online without a headline warning us that property Armageddon is around the corner. Sure, there's a credit squeeze, but the average consumer has lost their confidence because of the media. And the media keeps looking for experts chasing a headline. Listen as Dr. Andrew Wilson chief economist at and I discuss: While the fundamentals are relatively easy to quantify and examine – consumer behaviour is the X factor – hard to predict Worse with the 24/7 news cycle The media loves hotspotting – it's a bit like stock picking The market turned around last year after that famous 60 Minutes program in October last year. Martin North gave 4 scenarios but they honed in on the worst scenario Many of those who make predictions don't have skin in the game – or come from a general economic or stock market background, not property Steven Keen got a lot of publicity in 2008 in midst of GFC said property prices would fall 40% - lots of news coverage – prices fell 5.5% Had to walk 200km from Canberra to Mt Kosiosko wearing a T-shirt saying: "I was hopelessly wrong on home prices! Ask me how. Said he got the timing wrong – he said prices would fall 20% in 2011 and the market boomed – but got lots of publicity Some say I'm permanently optimistic about the property markets – but that's not correct – I'm realistic – in fact, I'm pessimistic about more locations that I think will do well – only 1% of properties are investment grade. 10 million properties in Australia avoid, regional, main roads most suburbs Perma Bears - Doomsayers make money from their predictions Confirmation bias – you read things to confirm your preformed beliefs The rabbit hole of Google – you'll keep reading articles that confirm what you just read. Links and Resources: Michael Yardney Metropole Property Strategists Dr. Andrew Wilson – MyHousingMarket.com.au Some of our favourite quotes from the show: "You won't truly get ahead by working for somebody else." –Michael Yardney "True wealth isn't just about how many properties you've got or how much money you've got, but there's no doubt that having money helps get rid of a lot of your troubles." –Michael Yardney "Don't compare your Chapter One to anyone else's Chapter 12." –Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how