Property investing is a game you win by beating averages
There’s a lot of ‘secret sauce’ and bunkum sold in the ‘How-you-can-get-rich-investing-in-property’ game.
Property spruikers and salesmen of all kinds will try to sell you on their Ten Step Magic Programme to Profits.* Some will promise you the sky — basically, they will say anything to get your money (and ‘Strictly no refunds’).
Some of these ‘Millionaire by Monday’ hype merchants are very slick and motivational. Others seem more genteel, less rubbery, and more down to earth. But frequently (always?) they come up short on specifics, or they’re a one trick pony, pitching the same approach (e.g. do-ups in a low rental area) for everyone. Be wary. Avoid them. I mean it.
Years ago a friend of mine taught me that property investing is a game you win by consistently aiming to beat the averages.
For example, say you’re looking for a rental property, it works like this:
If you can buy a house in a better than average area (defined by a record of better than average capital growth, therefore better than average prospects), and you negotiate a better than average deal** or finding a ‘twist’, then you do what it takes to get a better than average rent, selecting a better than average tenant — and you make sure to manage the property better than average …. well, you get my point:
You’ll do better than average.
That just makes sense.
For myself, I’ve learned that success in investing (or any other arena, actually) is not about finding a ‘Secret formula’ or ‘Turbo-charging your investment success’.
Yes, sure, that’s how things are sometimes sold … selling the sizzle … but often success is a process of taking a few right steps, getting the right advice and information, and (crucially) following through.
Sometimes it’s about keeping your nerve, staying on a path, doing the work, then reaping the rewards. (Are there any guarantees? No. Bad, unexpected things can happen. Consider the impact of the Christchurch earthquakes.)
Some operators (I’m using polite words) use pressure tactics to pitch the gullible on a quick profits scheme or a plan like Blackadder’s — you know, ‘A plan so cunning you could stick a tail on it and call it a weasel.’ I’ve seen so-called ‘investments’ sold on their ‘tax benefits’, and thinly-disguised rip-off schemes and rorts targeting lenders, where the ‘buyer’ is a victim too.
The trouble is, time and time again I’ve seen those involved in those schemes come unstuck — sometimes really badly unstuck.
Under the near-hypnotic influence of a smooth salesman pitching a ‘Tonight only! Price goes up tomorrow! Buy NOW!’ offer, otherwise sensible people fail to get professional advice (or worse, ignore it!)
Don’t be like those people who throw caution to the wind, setting up turmoil in their personal and financial affairs by greedily chasing the latest novelty Get-Rich-Quick ‘investment’, sometimes paying tens of thousands for ‘Secrets Only Millionaires Know About Investing’.
Sometimes people are sold ‘Access to an EXCLUSIVE circle of like-minded people’ where it turns out, the newbies are really just a pool of suckers for the predators running the show … or fresh meat for their property trader and developer mates who profit by selling them ‘Hot Deals’.
We’ve all heard the line, ‘If it sounds too good to be true, it probably is’. Yeah, well. Believe it.
For the sake of argument, assume just for a moment that I’m right:
Success will come to you if you consistently do a finite number of controllable things better than average. That doesn’t sound as sexy as ‘Millionaire by Monday’, does it?
But you know what? It actually is.
- Peter Aranyi March 2014
* I made that title up. I’m not referring to anyone specifically.
** Price or terms. They’re somewhat interchangeable — see Negotiating Real Estate Deals.
Quoting or reproduction welcome with attribution to www.EmpowerEducation.com
Peter Aranyi is the author of Commercial Real Estate Investor’s Guide and Negotiating Real Estate Deals, and editor of several other property investment books including How to Survive and Prosper in a Falling Property Market, The Rascal’s Guide to Real Estate, Property Tax – A New Zealand Investor’s Guide and Property Law – A New Zealand Investor’s Guide.