Property Investment, Success & Money | The Michael Yardney Podcast

Have you ever wondered how property professionals do their research? If you’re interested in finding properties that will outperform the market, this episode is for you. The most research many property investors do is finding a property that they already like, then looking for information that confirms their biases. However, sophisticated investors take a more strategic approach. Today, Kate Forbes, National Director of Property Strategy at Metropole, gives us a detailed picture of how the professionals at Metropole do their research. Metropole’s top down approach This starts with examining the macro factors affecting our property markets and drills down to the micro level. Start by looking at the big picture – the macro-economic environment. Look for the right state in which to invest – one that will outperform the Australian market averages because of its economic growth and population growth. Within that state, look for the suburbs that will outperform with regards to capital growth. It’s all about demographics. These suburbs tend to be areas where more owner-occupiers want to live because of lifestyle choices and where the locals can afford to and will be prepared to pay a premium to live because they have higher disposable incomes. Look for the right location within that suburb. Some livable streets will always outperform others and in those streets, some properties will always be more desirable than others. Then within that location look for the right property. And finally, only buy at... The right price, but I’m not suggesting a “cheap” property – there will always be cheap properties around in secondary locations. I mean the right property at a good price.  6 Stranded Strategic Approach Only buy a property: That would appeal to owner occupiers. Not because you plan to sell the property, but because owner occupiers will buy similar properties pushing up local real estate values. This will be particularly important in the future as the percentage of investors in the market is likely to diminish That is below intrinsic value – that’s why you should avoid new and off-the-plan properties which come at a premium price. With a high land to asset ratio – that doesn’t necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value. That is in an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area as mentioned above. That has a twist – something unique, or special, different or scarce about the property, and finally; Where you can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to do the heavy lifting as we’re heading into a period of lower capital growth. By following my 6 Stranded Strategic Approach, you minimise your risks and maximise your upside. Each strand represents a way of making money from property and combining all six is a powerful way of putting the odds in your favour. If one strand lets you down, they have two or three others supporting their property’s performance. When you look at it this way, buying a property strategically takes a lot of time, effort, research and something most investors never attain – perspective. What I mean by this is you can gain a lot of knowledge over the Internet or by reading books or magazines but what you can't gain is experience. It takes many years to develop the perspective to understand what makes an investment grade property. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Kate Forbes Some reading: Your Essential Guide to Property Research 5 Important Research Topics for Property Investment Success Some of our favourite quotes from the show: “We’re not looking for properties that are affordable to everybody, we’re looking for areas where people have got a high disposable income and can afford to, but more importantly are prepared to, pay a premium.” – Michael Yardney “If you buy a property to which you can add value through renovations or refurbishments, that will allow you to add some capital growth.” – Michael Yardney “Understanding the neighborhood is not the same as understanding the market. You may understand where the shops are and where the school zones are, but that’s very different to understanding the depth of the market.” – 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.

What’s the secret to success? What does success mean to you? Is it money, fame, travel, relationships, or the freedom to do what you want when you want? Different people think of success in different ways, but most people are after success in some form. In today’s episode, I’ll be chatting to entrepreneur Dale Beaumont, as he shares the seven secrets to success he’s learned from working closely with many, many successful people. Dale Beaumont is a technology entrepreneur, a speaker, and an author. He began his first business at the age of 19 and has been building businesses ever since. One of his companies has become a multi-million-dollar enterprise, which has allowed him to become an investor and philanthropist. He has already mentored many people and is hoping to help one million entrepreneurs around the world with his app Bizversity. Dale’s 7 Essential Characteristics of Highly Successful People: Desire: You really have to want to achieve and be willing to do whatever it takes. Determination and resilience: Your success journey won’t be easy. There will be challenges, roadblocks, and failures. You need the determination and resilience to be able to push through those challenges even when things look like they aren’t going to work out. Be an action-taker: It’s not enough to seek out good advice and training – you need to act on it. Don’t get so hung up on thinking about how to achieve success that you never end up taking action. Self-education: Formal education is important and has its place, but the education you receive outside of formal education that can make the difference to your success. Likeability: You can’t achieve success alone. You need a team. And the team that will work best for you is a team that actually likes you. It’s important to treat people well and earn their trust. Systemization: It’s important to use your hours in the most efficient way. Focus: You only get paid for the projects that you complete. It’s important to develop the focus that you need to see things through to the end. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Dale Beaumont Bizversity Some of our favourite quotes from the show: “One of the common traits I’ve found of all successful people is they do have coaches, they do have mentors, they do have advisors, and they’re actually prepared to pay for them.” –Michael Yardney “We all want a better life. We all want more success, whether it’s in business, in property, or in relationships. But the question is, how far are you prepared to go?” – Michael Yardney  “We tend to get bored with doing things the same way and look for shortcuts or other ways, so I’ve actually found systems in my business being a very great way of making sure that people just do it right, including myself.” – Dale Beaumont

This stage of the property cycle isn’t as much fun as the last couple of years when things were booming – is it? Many investors are having difficulty getting financing to start their portfolio or grow it. And capital gains aren’t assured, so where do you buy? By the end of this show, you’ll have more clarity about what's ahead and where to buy. Top Tips for getting finance in the changing landscape Seek professional advice Be prepared to justify and articulate your expenses Consider principle and interest loans rather than just interest-only loans Interest-only loans can have benefits as well Set up an offset account Choose the right investment-grade properties Make sure that you have financial buffers in place Being turned down is sometimes for the best – regulations exist for good reasons Avoid misreporting or misinformation and be prepared for heightened scrutiny Have your properties re-valued regularly Have a property strategy, an ownership structure strategy, and a finance strategy in place. Treat your property investment like a business. 3 Success tips To succeed in business or investment, you need to model successful people. Find people who have achieved what you want to achieve and follow what they do. Most people overestimate what they can do in 12 months and underestimate what they can do in 10 years. It takes time to gain traction. Most people are not successful. Identify the wrong strategies that most people are using and do the opposite. Not all land is created equal Overall, the inner and middle ring suburbs of big capital cities are the best places to invest. Most of the jobs are in capital cities, so that’s where migrants want to live. It only makes sense to invest in areas where people who want to live. Properties closer to the CBD and closer to water increased in value faster than those further from the CBD and further from water. Suburbs with better infrastructure, shopping and amenities tend to be close to the CBD and the water. That’s where the wealthy want to and can afford to live, and they’ll pay a premium to do it. Links and Resources: 2018 Property Renovations and Development Workshop Michael Yardney Metropole Michael Yardney’s Mentorship Program Intuitive Finance Some of our favourite quotes from the show: “So one of the things you should do when you go to your finance strategist or the banks is to actually understand what your income and expenses are, have your tax returns done, have all your paperwork ready, because they’re looking at it much more carefully.” – Michael Yardney “Going to the bank and asking for the biggest loan you can at the lowest interest rate possible isn’t a finance strategy. You’ll buy a property, and then you’re going to get stuck. – Michael Yardney “If you’ve got your ladder against the wrong wall, every step you take will get you a step further away from where you want to go.” – Michael Yardney Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Will your child be rich or poor?  If you’re a parent or a grandparent or planning to become one, this show is for you. I believe it’s our job to teach our children good money habits. And even if you’re not planning to become a parent, Tom Corley and I will be discussing some important money lessons in this Rich Habits Poor habits podcast.  So let’s talk about children…. Science shows that by the age of nine we have learned most of our habits. These habits come from our parents. We mirror our parents thinking, habits, and emotions. The beauty of rich habits is that you only need one or two of them to transform your life. Habits like reading and exercising will change your future. But emulating bad habits can force you into a situation where you have to eke out a living. It gets even worse. Sadly, 74% of children raised in a poor household had grades below a B and 34% had grades below a C. Why? Wealthy, successful parents teach their children certain success habits that give their children an edge in life. These Rich Habits, which give them this edge in life, begins to manifest itself in the classroom and continues into the workplace, where such children become working adults who receive higher pay, bigger raises and larger bonuses during their working career.  As a consequence, they accumulate more wealth in life. Will your child be Rich or Poor? Every student wants to be successful and thinks they will be successful, but none have been taught by their parents or their school system how to be financially successful in life. Not only are there no courses on basic financial success principles but there are no structured courses teaching basic financial literacy. We are raising our children to be financially illiterate and to fail in life. We don’t have a wealth gap in this country we have a parent gap. We don’t have income inequality, we have parent inequality.  Parents and our schools need to work together to instill good daily success habits. They need to be teaching children specific Rich Habits that lead to success. Examples of Rich Habits:  Limit TV, social media, video games and cell phone use to no more than one hour a day. Require that children read one non-fiction book a week and write a one-page summary of what they learned for their parents to review. Require children to aerobically exercise 20 – 30 minutes a day. Limit junk food to no more than 300 calories a day. Teach children to dream and to pursue their dreams. Have them write a script of their ideal, future life. Require that children set monthly, annual and long-term goals. Require working age children to work or volunteer at least ten hours a week. Require that children save at least 25% of their earnings or the monetary gifts they receive. Teach children the importance of calling family, friends, teachers, coaches, etc., on their birthday Teach children the importance of calling family, friends, teachers, coaches, etc. when anything good or bad happens in their lives. Examples include births, deaths, awards, illnesses, etc. Teach children to send thank you cards to individuals who helped them in any way. Reassure children that mistakes are good and not bad. Children need to understand that the very foundation of success is built upon the lessons we learn from our mistakes. Discipline children when they lose their temper, so they understand the consequence of not controlling this very costly emotion. Anger is the costliest emotion. It gets people fired, divorced and destroys relationships. Teach children that the pursuit of financial success is a good thing. Children need to learn how to manage money. Open up a checking account or savings account for children and force them to use their savings to buy the things they want. This teaches children that they are not entitled to anything. It teaches them that they have to work for the things they want in life, like cell phones, computers, fashionable clothes, video games, etc. Require children to participate in at least one non-sports-related extracurricular group at school or outside of school. Parents and children need to set aside at least an hour a day to talk to one another. Not on Facebook, not on the cell phone, but face to face. The only quality time is quantity time. Teach children how to manage their time. Teach them how to create a daily “to do” list. They can put their “to-do” list on their bedroom door, so parents can check it each day. OBVIOUSLY, IT IS NOT POSSIBLE TO FOLLOW EVERY RICH HABIT RECOMMENDATION LISTED ABOVE. All it takes is one or two Rich Habits to completely transform a life.  The reading habit, on its own, can set your children up for career success. The savings habit, on its own, can set your children up to be financially independent. The exercise habit, on its own, can set your children up for a long, healthy life. The happy birthday or life event calls, on their own, can set your children up to forge strong relationships. Pick just two habits to teach you kids and stay on top of them for six months. After six months the habits should stick. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “You can change your habits anytime throughout your life no matter what your age.” – Michael Yardney “In my mind, the lottery, or gambling, is a tax for people who can’t do maths.” – Michael Yardney “I believe it’s important to teach your children that it’s OK to dream, it’s OK to dream big, it’s OK to be successful, and allow them to set themselves goals and understand how to pursue them.” – Michael Yardney Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Are you where you want to be financially? If not, what’s holding you back? That’s what we’re going to talk about in today’s show. If you’re like most Australians, you’re probably not where you expected to be financially. Even if you’re doing well, understanding behavioural finance can help you do better. We make thousands of decisions every day. We usually make these decisions with almost no thought and this can lead to predictable errors in certain circumstances.      Confirmation Bias: The tendency to search for information that confirms your view of the world and ignore what doesn’t fit.  Confirmation bias also prevents us from looking objectively at an investment we’ve already made. Once we’ve bought a property we look for information to confirm that we’ve made a good investment while as the same time ignoring information that may indicate the investment may be a questionable one.      Anchoring Bias: The tendency to use anchors or reference points to make decisions and evaluations, even though sometimes these lead us astray. The first number you see, especially when it’s a price that comes up in negotiation, colours any that come after it. A high anchor influences you to spend more than you normally would. Whether we like it or not, our minds keep referring back to that initial number, and perceive any subsequent offers as being a discount or a deal, even if they’re objectively still too high.      Awareness Bias: There’s a chance that even if your investments are not doing so well, you may not even recognise it. it’s been shown the poorest performers in all arenas of life are the least aware of their own incompetence. Lacking the capacity to realise how badly a task is performing is known as the Dunning-Kruger effect.      Positivity Bias: Many people view residential real estate positively, considering it an asset class through which they can grow their wealth – and they continue to do view it in this light, even if their investments fail to prosper. Positivity bias can stand in the way of an investor taking action to rectify the situation.      Negativity Bias: Just as some investors can be overly positive this is the tendency to put more emphasis on negative experiences rather than positive ones. People with this bias feel that ‘bad is stronger than good’ and will perceive threats more than opportunities in a given situation.      Status Quo Bias: This describes our tendency to stick with what we know, whether or not it’s the best course of action. Psychologists call this “loss aversion” and it explains why so many Australians are willing to stick their money in a plain old bank account earning minimal interest, rather than taking the “perceived risk” of a property investment.      Survivorship Bias: The misconception here is that you should focus on the successful if you wish to become successful, while the truth is that when failure becomes invisible, the difference between failure and success may also become invisible. The trick when looking for advice is to not only learn what to do, but also look for what not to do.      Bandwagon Bias: This is the psychological phenomenon whereby people do something primarily because other people are doing it. This tendency of people to align their beliefs and behaviours with those of a group is also called “herd mentality.”      Restraint Bias: Following on from bandwagon bias, restraint bias is the tendency for people to overestimate their ability to control impulsive behavior. Psychologists say the very people who think they are most restrained are also most likely to be impulsive.      The Ostrich Effect: When an ostrich is scared, the bird supposedly buries its head in the sand to stay ignorant of the approaching threat. While we simply don’t have the neck length to literally stick our heads in the sand, people often deliberately look away from their money problems.      Choice-Supportive Bias: This is the tendency to prefer the things you own (even if they have flaws) over the things you don’t, because you made “rational” choices when you bought them. You may be convinced the investment you’ve just made is great because you spend so much time, research and emotion in selecting it. You rationalize your past choices to protect your sense of self.      Clustering Illusion: This is the tendency to see patterns in random events. This selective thinking can lead to wrong conclusions when faced with the multitude of mixed messages we receive about the property market.      Curse of Knowledge: You suffer from the curse of knowledge when you know things that other people don’t and you’ve forgotten what it’s like to not have this knowledge. Highly intelligent people often have difficulty asking for help or taking advice because they think they should be able to work things out for themselves.      Overconfidence: One of the worst things that can happen to an investor is to get it right the first time they buy a property. This often happens when you invest during a property boom because you tend to think you’re smarter than you are. The best defense against this is to continue to ask questions and be skeptical of your preconceptions.      Procrastination: Of course, we all procrastinate at times, but in the arena of property investment those who sat on the sidelines over the last few years waiting for the investment horizon to look clearer, have missed out on some fantastic opportunities.      Hyperbolic Discounting: This is the tendency for people to prefer smaller payoffs now over larger payoffs later, leading one to largely disregard the future when it requires sacrifices in the present.      Hindsight Bias: This is the tendency for people to overestimate their ability to have predicted an outcome that could not possibly have been predicted. hindsight bias matters because it gets in the way of learning from our experiences because if you feel like you knew it all along, it means you won’t stop to examine why something really happened. Hindsight bias can also make us overconfident in how certain we are about our own judgments.      Illusion of Control: Illusion of control is the tendency for human beings to believe they can control or at least influence outcomes that they demonstrably have no influence over. In property it’s the concept that you think you’ve got all your risks covered. In my mind risk is what is left after you’ve thought of all the things that can go wrong.      Information Bias: This is the tendency to seek information when it does not affect action. More information is not always better. Indeed, with less information, people can often make more accurate assessments because too much can lead to analysis paralysis.      Post-Purchase Rationalization: This is what happens when we buy something that turns out not to be up to standard. Yet, we want to believe that we didn’t waste our resources, so we try to rationalize the purchase. This happens much more often with impulse buys than with carefully planned investment decisions.      Skill Bias: There is so much information and education available to investors that many people feel they are qualified to make significant financial decisions, despite the fact that they have no experience to back them up. This can lead to unfortunate shortsighted decisions, which can be very costly if the properties fail to perform as you’d planned.      Personal History Bias: Research shows that the way you feel about a topic is generally pervasive and was most likely shaped by events experienced in your youth. These influences will show in the risks they are willing to take and the investments that appeal to them.      Bias Bias: This is probably the most important bias of them all – the belief that you are less biased than you really are. If you listened to the whole show without realising I’m talking about you, you’re suffering from bias bias. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “So, the first step to make better investment decisions is to become aware that we’re currently making bad decisions.” – Michael Yardney “When we make decisions that are biased, what we’re doing is trading off some version of the right decision for a comfortable decision today.” – Michael Yardney “The truth is that when failure becomes invisible, the difference between failure and success may also become invisible.” – Michael Yardney Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

This week I explain How to Profit from Renovations in the current property markets.  Listen as I discuss: My 8 step process for profiting from renovations. 5 tips for successful renovations Why renovations make sense in today's property market The one thing that many renovations courses teach that is patently incorrect.  I explain the 4 big benefits of renovations: - Increasing the rental return and therefore yield of your investment property Increasing the aesthetic appeal of the property and thereby attracting a wider tenant pool and often a better-quality tenant. Increasing your depreciation allowances. “Manufacturing” capital growth thereby increasing the overall value of your property, even in a flat market. I also walk through my 8 Step renovation process Why – what is your reason Preparation - finance & structures Where? Research target areas–due location diligence What - Find a property with value add potential – due diligence analyze Purchase – at “wholesale” Plan & Budget – consider your target market and end values The renovation process – create a higher and better use Post Renovation – my preferred strategy is lease, refinance and repeat Watch out next week for the second of this 2 part series where I discuss the 9 Step Property Development Process Links: My Property Renovations and Development Workshop

Where will our property markets be in three years?  We’re going through a bit of a rough time in the property cycle at present, which leaves a lot of people wondering what comes next. The availability of credit has tightened, and we’re in the face of slumping prices in some places and slower growth in others. But don’t panic. The market is behaving normally. Thoughts about where we’ll be in three years: BIS Oxford Economics suggests that we’re in for a soft landing. House growth prices in Sydney and Melbourne are falling gently, and that trend looks like it will continue, thanks to APRA’s tighter lending restrictions. Taking inflation into account, there will probably be modest declines in most capital cities over the next 12 months, and then fragmented price growth over the next three years. Although there is housing oversupply, population growth over the next few years should absorb that. The downturn in Sydney will probably continue over the next year before starting to rise again. BIS predicts Sydney’s median will fall by 2 per cent in the next financial year (2018/19), but an undersupply of dwellings will prevent larger price falls. Areas that have shown and proven themselves, like suburbs in the middle and inner rings of Sydney, will continue to make the best investment properties. BIS predicts that the Melbourne property market will grow by 6% between 2018 and 2021. BIS’s forecast is that Brisbane will see the strongest growth over the next three years, jumping 13% to a median of $620,000. Jobs creation and a low unemployment rate are contributing to the steady population growth driving demand. Canberra house prices are forecast to increase 5 per cent over the next financial year before slowing over the following two years, culminating in an overall rise of 10 per cent by 2021. Perth house prices have declined by 13 per cent since 2014 but the worst could be over. House prices in Hobart are set to rise by 5 per cent over the next year, and then slow in following years. House prices in Adelaide are expected to grow by 9 per cent by 2021. Prices in Darwin are forecast to remain flat over the upcoming financial year, followed by two years of limited growth.  Guest Experts: Kate Forbes – National Director Metropole Property Strategists Brett Warren – Director Metropole Properties Brisbane Ahmad Imam – Director Metropole Properties Sydney Links and Resources: More details of the BIS Oxford Report Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “Periods of strong capital growth, like we’ve experienced in many of our capital cities over the last couple of years, are always followed by periods of flat growth, or sometimes no growth, or falling property prices. That’s just how markets work.” – Michael Yardney “Meteorologists tend to predict the weather better than property commentators predict future property capital growth.” – Michael Yardney “What pushes property prices up is people’s ability to afford more property, and their desire to live in certain locations.” – Michael Yardney Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Today is the first birthday show of the Michael Yardney Podcast. Rather trying to come up with something new, I decided to try and distill the information, investment philosophies, tips and tricks that I and my guests have shared with you over the past year. As you listen to today’s show you’ll hear some of the most important insights I’ve shared over the past 52 weeks, all in one episode. I’ve called it…. The Rules of Property Investment Become financially fluent The secret to financial freedom is to spend less than you earn, save the balance and then wisely invest your savings in growth assets.  Learn how money, finance and property works and start investing early so you have time and compounding on your side. Adopt a proven investment strategy Smart investors follow a system to take the emotion out of their decisions and ensure they don’t speculate. This may be boring, but it’s profitable. Wealth is created by building a substantial asset base. You do this by holding good investments for a reasonably long time, reinvesting the income you’re receiving and allowing your capital gains to build up. Residential real estate is a high growth, relatively low yield investment, so I recommend a capital growth investment strategy. There is not one property market. While many people generalise about “the” property market there are many submarkets around Australia. Each state is at a different stage of its property cycle and within each state the markets are segmented by geography, price points and type of property. Not every property is investment grade Remember that while the location of your property will account for around 80% of its performance, it’s also important to own the right property to suit the local demographic. There are around 9.6 million dwellings in Australia and at any time there are about 250,000 properties for sale. But not all properties make good investments! In fact, in my mind less than 2% of the properties on the market currently are what I call “investment grade.” While there are a lot of properties built specifically built for the investor market – think the many high rise new developments that are littering our cities – most of these are not “investment grade.” Some would call these properties “investment stock” – they are what the property marketers and developers sell in bulk to naïve investors, but they are not “investment grade” because they have little owner occupier appeal, they lack scarcity, they are usually bought at a premium and there is no opportunity to add value. On the other hand, investment grade properties: Appeal to a wide range of affluent owner occupiers Are in the right location. By this I don’t just mean the right suburb –one with multiple drivers of capital growth – but they’re a short walking distance to lifestyle amenities such as cafes, restaurants and parks. And they’re close to public transport – a factor that will become more important in the future as our population grows, our roads become more congested and people will want to reduce commuting time. Have street appeal as well as a favourable aspect or good views. Offer security – by being located in the right suburbs as well as having security features such as gates, intercoms and alarms. Offer secure off-street car parking. Have the potential to add value through renovations. Have a high land to asset ratio – this is different to a large amount of land. I’d rather own a sixth of a block of land under my apartment building in a good inner suburb, than a large block of land in regional Australia. Demographics drives markets Over the long-term demographics – how many of us there are, how we live, where we want to live and what we can afford to live in – will be more important in shaping our property markets than the short-term ups and downs of interest rates, consumer confidence and government meddling. More of us are going to live in our capital cities, rather than regional Australia and the bulk of the population growth will occur in the big 3 east coast capital cities because that’s where the economic growth and jobs growth will occur. Real estate investing is a game of finance with some properties thrown in the middle. Strategic investors recognise that property is a long-term play, so they use finance to not only buy themselves properties but to buy themselves time to ride the ups and downs of the property cycle. They set up financial buffers to help you ride the property cycles. And they also protect their assets by owning them in the right ownership structures. For many this is in trusts. Take a long-term perspective Real estate is a long-term investment, yet some investors chase the “fast money.” The property market moves in cycles and even though there are a few years of flat or falling property prices every decade, well located real estate has increased in value on average by around 8 per cent per annum over the long term. Imagine if you could buy the house your parents bought at the price they paid thirty or forty years ago; how many properties would you have bought then knowing what they would be worth today? 8 The economy and our property markets move in cycles It’s a common fallacy that Australian property cycles last 7 – 10 years. They vary in length and are affected by a myriad of social and economic factors and then, at times, the government lengthens or shortens the cycle by changing economic policies or interest rates. Market sentiment is one of the key drivers of property cycles and one of the reasons why our markets overreact, overshooting the mark during booms and getting too depressed during slumps. During a boom everyone is optimistic and expects the good times to last forever, just as we lose our confidence during a downturn. Remember that each property boom sets us up for the next downturn, just as each downturn sets the scene for the next upswing. And over the next decade or so we’ll probably have a recession and we’ll most likely have another depression one day. During the last cycle, most investors didn’t really have their downside covered or their upsides maximized. Beware of doomsayers As long as I have been investing, and that’s close to 40 years now, I remember hearing people with excuses why property prices will stop rising, or even worse, why property values will plummet However, in that time, well located properties have doubled in value every 8 to 10 years. Fear is a very powerful emotion, and one that the media used to grab our attention. Sadly, some people miss out on the opportunity to develop their own financial independence because they listen to the messages of those who want to deflate the financial dreams of their fellow Australians. Follow my 6 Stranded Strategic Approach and only buy a property: That would appeal to owner occupiers. Not that I suggest you sell the property, but because owner occupiers will buy similar properties pushing up local real estate values. This will be particularly important as the cycle moves on, as the percentage of investors in the market is likely to diminish. Below intrinsic value – that’s why I’d avoid new and off-the-plan properties which come at a premium price. With a high land to asset ratio – this doesn’t necessarily mean a large block of land, but a property where the land component makes up a significant part of the asset value. In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area. These suburbs tend to be areas where more owner-occupiers want to live because of lifestyle choices and where the locals can afford to and will be prepared to pay a premium to live because they have higher disposable incomes. With a twist – something unique, different or scarce about the property, and finally; Where you can manufacture capital growth through renovations or redevelopment rather than waiting for the market to do the heavy lifting. Don’t focus on bargains – they rarely have a future In today’s informed market there are very few bargains. Properties that no one else wants today will probably be the type of property that no one else will want in 5 years’ time. Price is what you pay, value is what you get; so buy the best property you can afford – the type of property you’d still be happy to own in 10 to 15 years’ time. Don’t try and do it in isolation Very few property investors can successfully build a true property investment business without having a core community of peers with whom they can associate, share ideas, get candid feedback, and soak up new ideas. If you want to change your outcomes, have you considered upgrading your peer group? The top 2 reasons why your peer group matters so much: Your peer group’s attitudes, beliefs, and behaviours are contagious. They impact on the way you think, your ability to spot and take advantage of opportunities and your behaviors as you go after (or don’t go after) your financial goals. Alone you are vulnerable; connected we are strong. We all have blind spots and limitations, but your peers can help you bridge these gaps and share resources that help you make better decisions and financial choices. Allow for an X factor Every year there are a few “X factors” - unforeseen event or situations that blow away all our carefully laid forecasts away. These X-factors can be negative or positive and can be local or from abroad. There will always be a reason not to invest Every year brings its own set of crises and lots of reasons not to invest. Sure, some years are worse than others but there is always bad news and much of it is unexpected. Where investors get into trouble is that rather than focusing on their long-term goals, they see these crises as once in a generation events that will alter the course of history, when in reality they are just the normal path of history. You know less than you think you know There is a nearly insurmountable amount of material to learn about in the fields of property, finance and economics. The big lesson is that I know so much less than I think I know. Always continue learning. Don’t mistake money for wealth I’ve often said that any problem money can solve isn’t really a problem. While this means money will make your life easier to a certain degree, if you let money own you it will make you miserable. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “The worst thing that can happen to a property investor is to get it right the first time, because they think they’re smarter than they are.” “Patience is an investment virtue.” “True wealth is what you are left with when they take all your money and properties away – your health, your family and friends, your knowledge and mindset, your spirituality and your ability to contribute to society.” Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Are great property investors born or made? Can anyone achieve success in property investing? That’s one of the topics we’re going to discuss on today’s show. I’m also going to share a lesson I learned when one of my mentors asked, “where are you going to be in 10 years’ time?” Are you walking down the right road to arrive at the place you want to be? Finally, Ken Raiss of Metropole Wealth Advisory is going to join us to answer a question about ownership structures. Are great property investors born or made?      Napoleon Hill discovered that successful investors, entrepreneurs, and business investors share common characteristics      Successful investors aren’t born with these characteristics. That means you can learn them by doing what successful people do      In order to become successful, you need to put in the work. It takes time and practice to develop success strategies.      Successful investors learn the rules, gain experience, and refine and improve their strategies      You can gain expertise by getting a mentor and learning from their successes and mistakes. Study their mistakes and emulate their behaviors.      You’ll know you’re an expert when you can consistently outperform the averages   Where will you be in 10 years?      You can’t kid yourself about where you’re going, because you’re going to wind up there eventually. Look around and be honest with yourself about the path you’re on      Avoid engaging in disillusion. Don’t hope without acting or wish without doing      Ask yourself you can be doing to get the things that you want      Take advantage of the wealth of information available. Read books and blogs, listen to podcasts, attend seminars, watch videos, get mentors      Avoid disinformation. There’s a surplus of widely available information, but not all of it is good. Choose successful mentors and seek out good information What are the benefits of owning an investment property in different entities, such as in a personal name or a trust?      When choosing an ownership structure, it’s important to understand what you’re trying to achieve      Buying in a personal name is the simplest path, but that doesn’t mean that it’s always the best      Owning in a company is rarely the best way to own investment property      There are three types of trusts: a unit trust, a discretionary trust, and a self-managed superfund      A trust is only as good as the words used to write it, so it’s important to have someone who is skilled with writing trusts write yours      Begin with the end in mind. Consider which ownership structure will best suit where you plan to be in 5, 10, or 20 years and go with that, even if it isn’t optimal in the moment. Links and Resources: Michael Yardney Metropole Ken Raiss, Metropole Wealth Advisory Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “The way to become an expert is to do one thing 100 times, rather than 100 things once.” -- Michael Yardney “The main thing that separates successful investors from the wannabes is the ability to consistently outperform the averages. And yes, to get to this level of expertise, it takes time, patience, and practice.” -- Michael Yardney “Where are you going? Because 10 years from now, you’re surely going to have arrived.” -- Michael Yardney Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Yes it's true that 1% controlled 82% of the wealth in the world. I just finished reading an article complaining about the rich. In the author’s mind, there was something inherently unfair about this wealth inequality. The author, like many who are not in the 1%, felt that the wealth the 1% created didn’t necessarily belong to them and offered government solutions to cap or redistribute the wealth of the rich. The problem is... the top 1% will always control most of the wealth until the other 99% figure out how the 1% go about cultivating wealth. So, how do the 1% cultivate wealth? The top 1% cultivate wealth by doing certain things: Read to Learn Every Day — 88% of the rich in my Rich Habits Study read 30 minutes or more every day to learn. Reading is work. But it’s work that is necessary if you want to become rich. Rich people read because they know that knowledge can be leveraged to gain wealth. The more you know about your field, career or industry, the more valuable you are to those you service or sell to in your field, career or industry. Deliberate Practice — 69% of the rich in my study practiced some specific skill for two or more hours every day. Deliberate practice requires conscious practice as opposed to unconscious practice Conscious practice is practice in which you study everything you do that goes into the skill you have. It’s about studying the intricate details that enable you to become a virtuoso at what you do. Pursue Long-Term Goals or a Dream — 70% of the rich in my study pursued some long-term goal or some dream. This is what really drives the disparity between the 1% and the other 99%. Pursuing big goals or dreams creates the opportunity for good luck to happen. The majority of the 1% are beneficiaries of good luck – but good luck they put themselves in a position to receive. Focus on Daily Goals — 62% of the rich in my study focused on their daily goals. Save — 94% of the rich in my study saved 20% or more of their income every year. Be Frugal with Your Money — 67% of the rich in my study were frugal with their money. They spent their money thoughtfully, not emotionally. They buy the best made quality products at the cheapest prices. This requires study and patience and delayed gratification. Forge Rich Relationships — 68% of the rich in my study forged relationships with other upbeat, success-minded people. These are people who can open doors for you. They are individuals who are either trying to become the 1% or are the 1%. These 1% have powerful relationships with other 1% individuals. dream-clock-time-business-man-life-motivation-happy-dream Volunteer — 72% of the rich in my study volunteered 5 hours or more a month. Why volunteer? Most of the boards and committees in local non-profits are run by successful people within the community. 5 AM Club — 44% of the rich in my study woke up 3 or more hours before they began their work day to pursue dreams, goals, read, be productive, etc. Waking up early is important. It allows you to get things done first thing in the day that help move you forward in life. Become a Decision Maker at Work — 91% of the rich in my study were one of the decision makers where they worked. If you want to control the outcome of your life you need to be a decision-maker. Do Work You At Least Like — 86% of the rich in my study liked what they did for a living. When you like what you do, you will devote more time to doing it. More time in honing your skills. More time in reading to learn everything about your vocation. More time in building relationships with other success-minded people within your industry or field. More time devoted to improving yourself makes you more valuable. Everyone wants to be on top of the mountain, but few are willing to make the climb. The 1% control 82% of the wealth because the 1% are willing to climb the mountain. If you want to be one of the 1%, you need to start climbing. You need to do the things that cultivate wealth. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “One of the things the papers forget to mention is, if you’re listening to the podcast or reading their articles, you’re probably already in the top 1% in the world.” “School’s not out when you leave school or leave college. You have to keep continuously educating yourself.” – Michael Yardney “It’s often said that you’re like the five people you spend most of your time with.” – Michael Yardney Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes. You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.