Property Investment, Success & Money | The Michael Yardney Podcast

Success is not a miracle. Nor is it a matter of luck. Everything happens for a reason, good or bad, positive or negative. And it’s the same with success in property investment.  While real estate is generally considered a sound investment, only a small number of those who get involved eventually develop financial independence.  It probably won’t come as a surprise that when you study those who have achieved financial freedom through property investment, you will find they come from a variety of backgrounds, walks of life and educational standards, but there are certain traits shared by all these successful property investors. If you want to join the ranks of these investors you need to model them - you need to copy those who have achieved the success you desire. So, in this week's show I am going to discuss the habits these wealthy investors share in common. 18 Habits Shared by Successful Investors: Successful investors have a strategy. Defined goals and a wealth creation plan help investors see the big picture, maintain focus on their goals, and make purchases based on proven criteria rather than emotions. Successful investors treat their investments like a business. Investors who approach their property investments with a business plan are able to identify their objectives and define strategies to meet those objectives while successful navigating financial, tax, and legal systems. Successful investors keep educating themselves. Learning by making mistakes is a slow and demoralizing process. Investors who invest time and effort into their continuing education and into learning from mentors and mastermind groups can achieve more in a shorter period of time. Successful investors think big. Financial freedom is a big goal. Successful investors aren’t satisfied with small achievements and aren’t afraid to paint a bigger picture for themselves Successful investors know their markets. Sound investment decisions are based on facts, not feelings. A greater understanding of a particular market allows the investor to make smart decisions within that market. Successful investors develop a focus or niche. There are many ways to invest in real estate. The most successful investors don’t try to do all of them, they learn everything about a certain type of investment and focus on becoming an expert in that niche. Successful investors understand the risks. The business of property investment comes with fluctuating interest rates, changing property cycles, and various “X factors” that can derail otherwise good plans. Successful investors understand these risks and take precautions to mitigate them. Successful investors take full responsibility for their lives. Blaming others for your circumstances leaves you feeling out of control. Taking responsibility for yourself allows you to take control over your circumstances and reduce the number of bad situations you encounter while increasing the good. Successful investors are decisive. Indecision leads to inaction. It’s impossible to make good decisions one hundred percent of the time, but you should make the best decisions you can at the time and stick by them. Successful investors deal with problems when they arise and move on from them, rather than beating themselves up over bad decisions. Successful investors find opportunities where others see problems. Instead of focusing on the problems with an opportunity, look for ways to make the situation work. Successful investors are those who find hidden opportunities that other buyers don’t see. Successful investors embrace change. Change is inevitable. Successful investors find ways to take advantage of the opportunities presented by change, even when it means moving out of their comfort zone. Successful investors invest, they don’t speculate. Speculation is based on hoping that you correctly pick out the next hot spot or big trend. Investment is based on known facts. Investment may be less exciting than speculation, but it’s also considerably less risky. Successful investors build a competent team around themselves. No one can be an expert in everything. Successful investors surround themselves with trustworthy people who know more than they do, so they can focus on their own areas of expertise. Successful investors have learned to use debt wisely. Learning how to use other people’s money to grow a substantial property portfolio is a hallmark of successful investing. Successful investors belong to a mastermind group. When you surround yourself with like-minded people who are successful, you’ll learn from them. Successful investors surround themselves with winners and copy their habits.   Successful investors act with integrity. Standing by your claims helps you stand out from the crowd. Successful investors make commitments and stick to them. Successful investors see the big picture. Property values can take time to increase. Successful investors have the patience to see the end goal and wait for it, rather than trying to cash out fast for a quick payout. Successful investors think very differently to average investors. The vast majority of property investors are not successful. Successful investors are often those who look at what average investors are doing, and do the opposite. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “I know I have made more by saying “no” to so-called opportunities than by saying “yes” to them.“ – Michael Yardney “Successful investors realize that it’s not how much money they make that matters, it’s how hard that money works for them and how much they keep that counts.” – Michael Yardney “People create their own luck by putting themselves in the right frame of mind to accept success.” – 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.

Everyone knows that location is critical when selecting an investment property that will outperform. But what makes a good location and why are some locations better prospects than others? When I started investing around 40 years ago the emphasis for homebuyers was largely affordability and proximity to infrastructure. The outer fringes of our capital cities were developed in the wake of freeway extensions on all sides and commuting from vast, newly born suburbs into the CBD became commonplace. As far as amenities went, as long as you had a relatively easy drive to your place of employment, as well as nearby shops, healthcare services and schools, life was pretty good. It’s different today Nowadays the property choices Australians make are still driven by lifestyle, but how we think and function in today’s world has changed. With more than half Australian households having only one or two people in them, more of us are:        Choosing to start a family later in life.        Enjoying the opportunity to work flexible hours and from home offices.        Seeking better work-life balance and prioritising downtime before overtime.        Opting to live within walking distance from not only infrastructure necessary for daily living, but also cafes, restaurants and recreational facilities, as lifestyle moves to the top of the owner-occupier and tenant wish list, alongside affordability.        Downsizing to easily maintainable and cost-effective apartments and townhouses, with smaller gardens and more efficient, compact design. A short stroll to success This means that “walkability” has become the new buzzword on the property investment block. Of course, proximity to amenities such as shops, parks and public transit that allows local residents to either walk or take a short train, bus or tram ride, has long underpinned property values in inner city neighbourhoods throughout the developed world. But now we are witnessing a similar trend across an increasingly cosmopolitan Australia. In fact, it is common for a considerable premium to be paid for properties that are a short walk to the beach or café strips and long-term capital growth figures show that in Sydney the city’s most “walkable” suburbs have outperformed the averages by up to 20%. Where it’s “at” – the café culture It should come as no surprise that as our lives become busier and time is in increasingly short supply, cafés have become a kind of transition point where we meet up with friends, family and often business associates for a “catch up”. Many city dwellers have their favoured haunts, where they’re on a first name basis with the local barista and have a “regular” order. The serving and consumption of coffee has become somewhat of a ritual and many of us fancy ourselves as coffee connoisseurs. Given that more of us are living alone or in smaller households, it’s not surprising that the relaxed, “home away from home” vibe of inner city cafes is becoming an increasingly popular draw card for those seeking a familiar social outlet. Lifestyle locations dominate Yes, lifestyle has undeniably become the fundamental force in today’s residential real estate market. Culturally, we have become a nation that enjoys strolling to the local corner eatery to catch up with friends or just enjoy some time out with a latte. But it’s not only suburbs close to the beach and bay that command premium. Proximity to schools with a good reputation is a must for many family buyers, with some purchasers prepared to pay extra to be within a particular school catchment zone so their children can either walk, bus or “train it” to school. In fact, in my experience, parents are more willing to spend half an hour or more driving to work if it means their children can safely walk to an esteemed, local school. Australian cities have now been ranked by Walkscore As our population grows and our major cities increase in population by an estimated 10% over the next five years, the walkability of an area will be become an even more important consideration for property investors seeking locations that will outperform into the future. Well, now you can find out how “walkable” your suburb is. Walkscore.com, which measures the number of typical consumer destinations within walking distance of a dwelling, with scores ranging from 0 (car dependant) to 100 (most walkable) has recently ranked more than 100 Australian cities and 3000 suburbs. And the good news is that walkable neighbourhoods were recently recognised for their health and economic benefits afforded to residents by the University of Melbourne, where a 10 year study found good access to local infrastructure encouraged more people to ditch the drive and adopt “health-enhancing behaviours”. For property punters, the cultural transition that Australians are undergoing is important to note. It signals an end to the suburban McMansion “fad” and demonstrates just how crucial demographic waves of change can be to planning and executing a successful, long-term property portfolio. While affordability will always be a factor in our property decisions, lifestyle is the fundamental key in our marketplace today. Inner city, bayside apartments filled with character and complemented by flowing, commonsense floorplans, with excellent nearby lifestyle amenity have become the “new black” in residential real estate for many buyers – young and old. This is where investors would do well to focus their property investment activity in years to come. Productivity hacks to make you more efficient      Start your day by asking yourself what one thing you could do in 30 minutes or less that would have the biggest impact on your life. Do that first.      Set aside a block of focus time to work on high-value activities      Do the hardest task of the day first      Narrow your focus to the few things that will truly make a difference      Consider getting a personal assistant      Hire people to take on less valuable tasks, like cleaning or yard work      Prioritize your emails      Avoid using your inbox as your to-do list      Use a program that will schedule your appointments      Have multiple email signatures that contain information needed in recurring emails      Get to the root of recurring problems and solve them permanently      Grow your capacity to tolerate leaving lower-value tasks undone Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Michael Yardney’s Mentorship Program Some of our favourite quotes from the show: “It’s important to find out how walkable a suburb is because as our population grows the convenience to amenities, the walkability of suburb is going to be more and more important.” Michael Yardney “If you understand the sort of property that’s going to be in continuous strong demand in the future, that’s going to underpin the success of your property portfolio.” Michael Yardney  “Getting and becoming are so closely intertwined that what you become directly influences what you get.” 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.

Have you ever considered a joint property venture to help you get into property or get yourself to the next level? Many people are having difficulty getting into property or getting to the next level, and some people are considering joint property ventures as a way to get involved in property development. In today’s episode, I’ll discuss the pros and cons of getting into a joint property venture. Later in the episode, we’ll talk to Stuart Wemyss about how the Reserve Bank sets interest rates. If you’ve ever wondered what the RBA does every month and how it affects banks, this will interest you.  Finally, we’ll hear Ken Raiss answer a question about depreciation. The information he shares should be of interest to you if you’re a property investor. What to consider before you get into a joint property venture:      Money can change relationships. Don’t proceed with a joint venture if you’re not sure the relationship with a friend or family member can withstand the pressures of investing together.      Put everything in writing before you get started. That includes your goals, each person’s responsibilities, who is contributing what, and how profits will be divided.      Make sure that not only are you financially capable of taking on the investment, but the people you’re investing with are financially capable as well.      Consider how the venture will affect your credit standing. You’ll get a third of the income, but you’ll be considered liable for the whole mortgage.      Make sure that you’ve documented your exit strategy as well as your entry strategy.      Protect yourself with life insurance and income protection insurance, in case of unforeseen complications.      Property ventures aren’t necessarily a bad idea, and you shouldn’t rule them out. But look at them very carefully before proceeding. Some of the things I discuss with Stuart Wemyss about how the RBA sets interest rates:      The Reserve Bank’s role in managing inflation and the exchange rate      Why the Reserve Bank is unlikely to raise interest rates until inflation picks up      How interest rates have changed over the years      How the reserve bank decides what interest rate it’s going to charge      The importance of interest rates when it comes to choosing a lender Can you still claim depreciation on the purchase of an established property?      There are two types of depreciation: depreciation on the building, and depreciation on the fixtures and fittings      On an established property, you can claim depreciation on the building, but not the fittings and fixtures      If you do a renovation, you can claim the depreciation on the new cost that you’ve spent upgrading the property      If you buy a new property, you can claim both types of depreciation      If you have multiple earners on the title, you need a different type of depreciation schedule Links and Resources: Michael Yardney Metropole Michael Yardney Books Rich Habits Poor Habits Stuart Weymss Ken Raiss Some of our favourite quotes from the show: “Like it or not, when money comes into the equation, relationships sometimes change.” Michael Yardney “Rainy days can happen, so you may as well own an umbrella.” Michael Yardney “In the 80s and 90s, I managed to take part in some very, very significant property developments by choosing the right joint venture partners, and now I’m in the position to help my children get into property by partnering with 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.

If you want to become a better investor, this week’s show is for you. Today I’m going to chat with you about two important topics that will be relevant whether you’re a beginning investor or a seasoned pro. Firstly, I’ll talk about the 7 habits of highly effective investors. I’ll look at the 7 habits of highly effective people and explain how these approaches to success also relate to investing. Then, I’ll go through an exercise of deciding what I would teach my 21-year-old self if I could go back in time with the knowledge I have now. You may want to try the same exercises. Chances are, the lessons you would teach are some of the same lessons you should focus on today. 7 Habits of Highly Effective Investors      Be proactive. You can choose to take control or be controlled. You’re where you are because of all the things you’ve chosen to do and all the things you’ve chosen not to do.      Begin with the end in mind. By focusing on your desired outcome, you’ll lead yourself toward those goals. Set long-term goals, make a written plan, and devise a strategy to get there.      Put first things first. You need to learn how to prioritize actions. Take a step-by-step approach. Keep the big picture in mind, and don’t be afraid to say no when an opportunity doesn’t fit in with your plan.      Think win-win. There is more to be gained from cooperation than competition. Learn how to be happy with what you have while you pursue what you want.      First seek to understand, then be understood. Really listen when someone is speaking, instead of just formulating a reply. Avoid confirmation bias. Be skeptical of your preconceptions.      Synergize. Creative cooperation allows us to uncover new solutions. Surround yourself with consultants and mentors that will lift you up, not drag you down.      Sharpen the saw. Your greatest asset is yourself, so you need to look after your mind, body, and spirit, and maintain a healthy balance. Don’t be afraid to spend or invest money on your education and learn from your victories and mistakes and those of others. 21 Lessons I Would Teach My 21-Year-Old-Self      Learn from your mistakes. Mistakes are inevitable. Learn from them and keep going.      Love change. Change happens for a reason, so learn to be ok with it.      Say “no” more often. You don’t have to say yes to everything someone asks you to do.      Focus on becoming good at one thing. Successful people specialize.      Tell people how you feel. Never underestimate the power of a good compliment. Don’t be afraid to be honest, and to apologize when necessary.      Don’t worry so much. Most of what we worry about never happens.      Be honest with yourself and with others. Honesty gives you peace of mind, and that’s priceless.      Remain curious and keep learning. Ask lots of questions. Invest in yourself by investing in your education. Continued personal development is the key to success.      Get good mentors early in life. Don’t be shy about doing this. We all need to learn from somebody. Why not learn from the best?      Be grateful. No matter how much money you have, you won’t be wealthy unless you’re grateful and enjoy life.      Love yourself. You can’t be fulfilled until you’re happy in your own skin.      Don’t compare your Chapter 1 with someone else’s Chapter 20. Everyone has their own problems. Concentrate on being a better person today than you were yesterday.      Help others become successful. When you find yourself in a position to help others, bring them up to where you are.      Enjoy the journey. If you don’t enjoy the journey, you won’t enjoy the destination.      Stop making excuses. Don’t be a victim or blame others.      Take risks. Don’t be reckless, but don’t let your fears stop you from taking calculated risks.      Choose your friends wisely. The people you surround yourself with will rub off on you. You’re more likely to be successful if your friends are like-minded and motivated.      No one owes you anything. If you want something, work for it.      Think long-term. You need to think 10, 20 ,30 years in advance. Great things take time.      The 80-20 rule. The people who work the hardest aren’t necessarily the most successful. You can work little and be smart about it and get what you want.      Make investing a priority. Invest time in learning how money works, how it’s made, and how it grows. Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Some of our favourite quotes from the show: “You’ve got to become the pilot of your life, not the passenger.” --Michael Yardney “Learn how to be happy with what you have while you pursue what you want.” --Michael Yardney “I’ve made more by saying “no” to things than by saying yes to all those perceived investment and business opportunities that have been put in front of me.” --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.

Have you ever wanted to sit me down in a corner and ask me all of your questions about property? That’s what Liz and Marc from Finder.com.au did. Earlier this year, they asked me all their questions about property. The interview had so much good information in it that I asked permission for you to hear it on my show Listen to the episode to hear about the major forces driving our property market, the effects of APRA, what I see ahead for interest rates, how rising interest rates might actually make it easier for new investors to enter the property market, and much more. They spoke with me about a variety of property related topics, including:      The major driving forces behind the property markets in 2018      APRA's effect on the property market in the past and going forward      Where I see interest rates heading      How rising interest rates make it easier for new investors to enter the property market      Where I see price growth in 2018 (Hint: It's not just Sydney or Melbourne)      How the infrastructure boom will drive price increases      My advice for dealing with property investment advertisements      Lessons about property spruikers      My view on Australian population growth      My view on Sydney, Melbourne, Brisbane, Hobart, Canberra, Adelaide, Perth and Darwin      Why I think you shouldn’t invest in Hobart, and what lessons potential Hobart investors can learn from Darwin      Why I think many investors will sit on the sidelines this year Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits The Finder.com.au Money Podcast Some of our favourite quotes from the show: “Looking forward, I see a number of outside influences that are going to make a difference to what happens to our markets.” – Michael Yardney “I think meteorologists and weather forecasters get a better result of the weather than property forecasters do because the property market has multiple drivers, and it’s not just the fundamentals.” – Michael Yardney “I guess my message is: don’t compare your chapter one to somebody else’s chapter forty. Your parents’ first house was not the same house they have now.” – 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.

When the world of finance changes, property investors must be prepared to change with it. In today’s episode, I’ll be chatting with property analyst Pete Wargent about recent changes in finance and how they have affected his investment strategies. Changes in the market and new regulations affect the property cycle, and investors must adjust their strategies at different phases in the cycle. These changes also affect different segments of the market differently meaning you may want to avoid certain segments and focus on others. The changes in bank’s lending policies may also affect your endgame -  of your investment strategy of how you will live off your property portfolio. Listen to our conversation and learn more about how the markets are changing and how you can tweak your investment strategies to keep up with the phases of the investment cycle. Some of the things we discuss: How the APRA (The Australian Prudential Regulation Authority) introduced macro prudential controls have caused banks to change their lending criteria The concerns about high levels of debt and speculation that prompted regulators to make changes. How new regulations are affecting serviceability, including stress-testing mortgage applications and slower levels of investment lending below certain imposed caps How lending controls have changed since the Global Financial Crisis What APRA’s restrictions on how quickly banks can grow means for the housing markets Which areas of the housing market are most affected by the recent changes, and which are still solid investment opportunities How management of personal finances affects the way that regulations will impact borrowers Why rentvesting is sometimes a sensible option for people looking to begin growing their investment portfolio Why now might be a good time to sell an underperforming property How having a large enough pool of equity enables you to have more choices Links and Resources: Michael Yardney Metropole Rich Habits Poor Habits Pete Wargent Daily Blog Pete Wargent on Property Update Wealth Retreat  Some of our favourite quotes from the show: “I love the old saying that a rising tide lifts all ships and that’s what happened in a lot of our property markets, especially the booming markets of Melbourne and Sydney, and then once the tide goes out, you can see who’s swimming naked.” Michael Yardney “Human nature is to think that when things are going great they will always continue to do so, but of course there comes a point when valuations are too stretched and that’s arguably what we’ll see over the next year or two.” Pete Wargent “I’d rather you own one or two good investment grade properties, rather than a bunch of secondary properties, because the stability of the good properties is going to give you the peace of mind and the ability to sleep at night rather than the volatility of the less sound residential real estate assets.” 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.

The 8 Golden Rules of Successful Investing - part 2 There are only 8 rules to successful investing according to Stuart Wemyss, my guest on this week’s show. According to Stuart, investing is as easy as winning a game of monopoly when you know the rules. Last week I talked to Stuart about the first four rules of investing. This week we’re going to continue the discussion by explaining the remaining rules. If you haven’t yet, make sure to listen to last week’s episode, The 8 Golden Rules of Successful Investing - part 1. The Golden Rules That We Discussed Last Week: Rule #1 Play the long game Rule #2 Know how much income you need and by when. Rule #3 Spend less than you earn and invest the difference regularly Rule #4 Grow your asset base first and then tilt towards income The Golden Rules That We Discuss This Week: Golden Rule #5 Set your asset allocation to reduce risk and maximise returns Asset allocation is the decision where to invest: property, shares, bonds, commercial property, cash, etc. Asset allocation is an investor’s most important decision as you cannot control markets and returns – but can control where you invest. My advice is to adopt a strategic long-term asset allocation and then make small tactical tilts to accommodate asset class (under/over) valuations. Property is lumpy so: (1) look at ex-property allocation on a year by year basis and (2) project/aim to have a more balanced asset allocation by the time you reach retirement Need to reduce volatility – i.e. don’t lose money. If you lose 50%, you need to make 100% back. Volatility: Shares = 20%, bonds 7-10%, property 10%. Invest in negatively correlated assets e.g. shares and bonds. Property has very little correlation with shares and is negatively correlated to bonds. Your allocation depends on your starting point, risk profile, goals, time until retirement, etc. – I back-test various allocations in the book. You need professional and independent asset allocation advice. Golden Rule #6 Invest in the share market using low-cost passive investments Two types of management styles: active and passive. Depending on the study, between 70 and 96% of active fund managers fail to beat the market over the medium to long run. The longer the period studies, the worse the results. So, picking an active fund manager that beats the market is like finding a needle in haystack, just invest in the haystack (index). Other benefits of a passive approach include: lower fees, less tax (turnover), more diversification. Indexing works because Fees are low It relies on a rules-based approach which is repeatable and testable; and You don’t have to put your faith in one index methodology. Instead, use various, robust, and proven index approaches (e.g. traditional market cap, fundamental indexing, dimensional): You can access low-cost index funds through Exchange Traded Funds and managed funds. Super: some industry funds offer indexing, BUT it is only traditional indexing – I believe you must diversify. Optimising returns and fees typically will have a greater financial impact than extra contributions – so optimise the way your super is invested and the fee you pay first. I have included example portfolios in the book i.e. which fund to invest in. Golden Rule #7 Only invest in ‘investment-grade’ property Definition of investment-grade property: doubles in value every 7-12 years Three factors that all investment-grade property must have: (1) Strong land value component (2) scarcity in terms of land supply and property type (3) proven performance. That is why off-the-plan property doesn’t make a good investment – it fails all three criteria. I believe that you must pay for asset selection advice from a reputable buyers’ agent. Quality trumps quantity – that is, in my experience, investors rarely need more than 3 quality assets to be able to fund retirement Constructing a property portfolio: diversify geographically, diversify across various price points, diversify your tenant profile, investing in a different market to where your home is located. You must seek professional loan structuring advice to ensure your tax, cash flow and risk are optimised. Must have a debt exit strategy i.e. how are you going to reduced debt to an adequate level by the time you reach retirement?  Some of these are covered in the book. Golden Rule #8 Protect your investments from expected and unexpected risks Investing is about getting the highest return for the lowest risk. To achieve this you must mitigate all risks. You must insure your most valuable asset i.e. your ability to earn an income. Insurance is simply an investment expense. If you are going to borrow to invest, you must insurer yourself. Its early black and white i.e. all or no cover – more correctly it’s about finding the right level of cover. I talk about the how to get the best (cost-effective) cover in the book. Life and TPD insurance should be held inside super (not in personal names). Interest rates – use fixed loans and stagger maturity dates. Consider asset protection, especially if you are self employed and in a higher risk occupation. Must have landlord insurance if you invest in property. Estate planning – make sure wills and power of attorneys are up to date and robust enough. Consider relationship breakdowns i.e. cohabitation agreements, financial agreements Selecting an advisor you can trust If you have decided that you want to use property to build wealth, great. If not, you need independent advice to help you work out which asset classes to invest in: To avoid all the horror stories, only seek advice from an independent advisor: Take no commissions, referral fees or kickbacks Offer fixed fees Have nothing to sell you Be privately owned with an AFSL and with no links to banks or investment providers Demonstrate deep knowledge of all asset classes (especially property and shares) Remember, you’re paying for experience, not knowledge. Experience tells us how and when to apply the knowledge. Getting advice is not opinion shopping. Advice can be proven to be correct using simple math and logic. If it doesn’t make sense to you then its likely you are dealing with the wrong person. Links and Resources: Michael Yardney Metropole Stuarts’s special offer: Save 30% off the price of his book Investopoly Go to http://investopoly.com.au/ and follow the links to buy. Use the code “Yardney” to get a 30% discount. Some of our favourite quotes from the show: “While you can get a lot of information you can get off the internet, there’s an element that you just can’t get, and that’s perspective, that’s experience, that’s on-the-ground knowledge of what’s going on.” – Michael Yardney “I’d rather own one Westfield shopping center than 50 properties in regional Australia.” – Michael Yardney  “I’ve found most of our successful clients have advisors in various areas of their life, and they see them as an investment, not as an expense, and really having good advisors is another risk mitigation strategy.” – 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.

Investing is easy when you know the rules, and according to today’s guest, there are only eight rules to investing. If you’re interested in becoming a successful investor today’s show is for you as we discuss the eight rules of investing with Stuart Wemyss. Stuart is a financial planner, an accountant, a mortgage broker, and a successful property investor. He’s also an author, and he’s with us today to talk about his book Investopoly. Interview with Stuart Wemyss Why did you write Investopoly? Investing is easy when you know the rules – just like winning the game of Monopoly. I wanted to shares these rule – a simple formula to help people build wealth and not get fooled into investing in dud investments. The rules aren’t my opinion. They are simple, irrefutable laws, rooted in math and logic. They are evidenced-based and can be observed working in markets for decades. Applying those laws makes it very easy to (1) avoid making mistakes (2) work out what to do next and (3) be a successful investor. Golden Rule #1 Play the long game Long term financial decisions promote exercising delayed gratification – patient investors are rewarded, impatient ones are not Market are not efficient in the short run – so thinking short term creates anxiety and doesn’t help you invest wisely Over the past 30+ years returns are relatively similar: Aussie market = 9.25%, property market = 12%, US market = 10.5% - so its not a question of which “asset class” provides the best returns. More about which asset class suits you and your stage of life. Best question you can ask yourself: “what action can I take today that will result in me being a lot financially stronger in 10, 15 and 20 years?” Completely ignore short term impacts. Golden Rule #2 Know how much income you need and by when Stephen Covey’s advice: “begin with the end in mind”. You don’t need a map until you have a destination. You need to set two important goals: how much income you need in retirement and by when? Look at what you are spending today – that’s probably a good indication of what you will need You have to expect to live a lot longer due to medical advances. Will you live until 90? 100? Therefore, you don’t want to have to eat into capital in retirement = get asset mix right. Retirement increases the risk of clinical depreciation by 40% - due to the absence of contribution and growth. So, maybe the answer is to keep working? Or find something to do in retirement that “contributes” to others and things that promote personal “growth”. Golden Rule #3 Spend less than you earn and invest the difference regularly Commit to an annual surplus that you will contribute towards building your financial future (this could be home loan repayments, super contributions, property, shares, etc.), then spend what’s left over. It is your ability to consistently allocate a surplus cash flow (year after year) that will have a massive impact on whether you will be a successful investor. If you are not a “saver” then redefine “saving” as “future spending” Merely just measuring cash outflow is typically enough to bring it back into line: I suggest allocating all outflows into seven categories: financial commitments, utilities, health and education, shopping and transport, entertainment, cash and other. If you don’t have a surplus income at the moment: Reduce the regularity of any big discretionary items e.g. go out to dinner once every 8 weeks Commit to saving future income increases (pay rises, bonuses, etc.) Make sacrifices like holidaying every 2-3 years instead of annually Get help from an accountant to help you measure and manage cash flow. Golden Rule #4 Grow your asset base first and then tilt towards income When we build a house, we do it in a certain order because that yields the most efficient and robust build. We should invest in a certain order too – for similar reasons. More income = more tax. Whereas with growth you don’t pay tax until you sell the investment. This is the power of compounding capital growth. Compare two investments that generate a gross return of 10%: 4.5% income + 5.5% growth versus 2% income + 8% growth = 21% higher return in 20 years’ time after all tax is paid! That is the power of investing for growth first and then tilting towards income. Select assets that provide most of their total return in growth and relatively low proportion of income How will capital growth help fund retirement? Sell assets, with enough time income will be substantial, invest in other income-style assets, sell one property and reinvest in bonds, etc. You need to develop a financial model in order to work out how much to invest, when and in which asset classes. Links and Resources: Michael Yardney Metropole Stuarts’s special offer: Save 30% off the price of his book Investopoly Go to https://www.prosolution.com.au/books/ and use the code “Yardney” to get a 30% discount. Some of our favourite quotes from the show: “I’ve found that it’s not just understanding the rules, you’ve actually got to stop people making mistakes. You’ve got to stop people from doing what they feel like doing and getting emotionally involved, rather than sticking to the rules.” Michael Yardney “You’re going to require a lot more money in retirement than you think. First of all because you shouldn’t compromise on your lifestyle, and also because you’re probably going to live a lot longer, so you don’t want your money to run out before you do.” Michael Yardney “If you don’t have an asset base, you don’t have any money choices.” 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.

What are Australian properties going to be worth in a decade? What’s going to make a good investment property over the next 10 years?  What are the major trends that are going to affect our property market? It’s interesting to look at the difference between predictions that were made 10 years ago and what really happened between then and now. In today’s show, I’ll share a discussion I had with Ahmad Imam about the major property trends and influences to expect over the next 10 years. Then I’ll share my predictions for what will make a top performing investment over the next decade. You’ll hear us discuss: The major trends that will affect our property markets over the next decade including. Demographic trends Population growth – household formation How we want to live Where we want to live Economic trends We’re transitioning from a manufacturing country and a resources led economy to an economy based on service industries What will this do to where job growth will occur – wages growth will occur – obviously affect housing How we’re going to invest in a lower inflationary and wages growth environment How the forecast strong population growth will affect us – it’s not all good news – there certainly are some challenges ahead Population growth and the wealth of the nation will underpin property values – we need both. Over the year to September 2017 the annual growth in Australia’s estimated resident population picked up to +395,600. This is the largest annual increase since 2013 in absolute terms, if not in percentage terms. More than half of this growth is due to immigration – Australia’s permanent migrant intake is capped at around 200,000 per annum, but the overall pace of net overseas migration was faster than this, partly accounted for by international students. The estimated rate of population increase through net overseas migration is a bit faster than might be implied by the issuance of permanent residency visas, with the growth international students accounting for some of the difference. Where all these people are moving to Why population growth alone won’t create economic growth, and what is really needed. A big demographic trend that will shape our property markets but doesn’t seem to be mentioned much. Our ageing population means we have more one and 2 people households, meaning the type of property that will be in continuous strong demand will be different in the future with more people trading backyards for courtyards and balconies. More single older people, more DINK’s, more empty nesters, more young singles getting married later. Smaller average household size means we need more dwellings for the same number of people WEALTH RETREAT 2018 We also discuss Wealth Retreat 2018 which be held on the Gold Coast on June 9th to 13th. Click here to find out more and register your interest By the way… Wealth Retreat is not really a property seminar, even though we do spend a lot of time talking about property. Wealth Retreat is about creating lifetime wealth and leaving a legacy. It is aimed at already successful property investors, business people and entrepreneurs. We have Australia’s leading faculty of property, tax, finance, financial planning economic and business growth experts. I’ve found many of the attendees from previous years felt isolated in their wealth creation journey and by joining us they suddenly developed a peer group of like-minded people. Find out more at com.au image how you will be different after 5 days immersed with a room full of successful movers and shakers. My predictions for the next decade: We are in for a period of slower capital growth – can’t count on the market doing the heavy lifting Strong population growth will occur in our capital cities compared to regional Australia We have 2 super star cities, but strong capital growth in big 4 capital cities There will be disproportionate wages growth in some locations because of the jobs that will be created in the service industries Some commentators have got it wrong saying buy in regional areas as we’re going to be the food bowl of Asia – I hope we will – but not high wages growth and tourism leads to part time / casual jobs Don’t fight the trends – invest in the 3 big capital cities Learn from the big overseas property markets More people will trade space for place – and backyards for balconies and courtyards Location will do 80% of the heavy lifting but you still need the right property To ensure they buy an “investment grade” property that outperforms the market, investors should consider using my 6-Stranded Strategic Approach, which means that they would only buy a property: That appeals to owner occupiers. Not that they should plan to sell their 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. Below intrinsic value – that’s why I would 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. 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. With a twist – something unique, or special, different or scarce about the property, and finally; Where they can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to deliver me capital growth. Links and Resources: Michael Yardney Metropole Wealth Retreat Some of our favourite quotes from the show: “In the last year in Australia, population growth was almost 400,000 people. It was estimated to increase by 395,000 people. That’s the largest increase we’ve had in population growth, in absolute terms, since about 2013.”  Michael Yardney “We’re having significant growth, more than any other developed nation in the world.”  Michael Yardney “Don’t fight the trends. Buy in capital cities.”  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 lucky? How important is luck in your success in property investment, in business or as an entrepreneur?  We often think success comes as a reward to the hardest working, most focused, and most talented individuals. But is that really the case? Believe it or not, luck may play a bigger role in success than you think.  Today I’ll be talking to Louise Bedford about what science has to say about the role that luck plays in success in business and property investment.  Some of the things we discuss: Whether or not people create their own opportunities Why people may have difficulty seeing opportunities Some of the findings put together by Scott Barry Kaufman and published in Scientific American A study by Italian physicists Alessandro Pluchino and Andrea Raspisarda and Italian economist Alessio Biondo that attempts to quantify the role of luck and talent in successful careers How people can learn to see opportunities when they arise The most important keys to achieving success Long-term goals Studying and learning Building a team of consultants and mentors Optimism Decisiveness Specialise rather than diversify Admit to mistakes and correct them The greatest driving force for people who have achieves success What people can do when they fear change but are eager for the opportunities that change can bring The top three things that Michael would want to say to young people How the people you associate with can affect your ability to achieve success Michael Yardney’s Wealth Retreat  Links and Resources: Michael Yardney Metropole Wealth Retreat The Trading Game Some of our favourite quotes from the show: “Luck finds positive people – people who seek opportunities. I’ve found luck favours the persistent.” Michael Yardney “You must invest your time and energy in yourself – in your personal development perfecting your skills and knowledge.” Michael Yardney “Never quit on your dream. Luck does not visit quitters.” 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.