_{0.00 – HAPPY NEW YEAR TO OUR LISTENERS!}

_{1.38 – Cate opens the episode with mistake number one: failing to set clear short and long term goals.}

_{6.18 – Why is jumping into the market without a strategy for the next purchase so dangerous?}

_{13.00 – When emotions get in the way…}

_{21.18 – Sneak peak into next week’s ep: What do building and pest inspections really tell us? And what questions should buyers be prepared to ask?}

_{27.56 – What can go wrong when buyers accumulate properties in their portfolio without considering cashflow and savings buffers?}

_{32.54 – Gold Nuggets}

This week, Dave has prepped a great episode for our listeners. Cate opens up the conversation with the first of the five mistakes that buyers make when they fail to plan. Failing to set clear short and long term goals can undermine an investor’s outcome from day one. Dave provides some clear pointers for buyers to adopt as they encounter this critical first step.

“Entering the property market without a plan or without goals is like running a marathon with a blindfold on. You’re bound to trip up and face setbacks.”

Mistake number two prompts some good discussion between the Trio. Jumping into the market without a strategy for the next purchase is unfortunately something the Trio hear about often from remorseful buyers. Making property purchase decisions that don’t align with goals is more common than people would think.

As Mike suggests, buyers need to consider so many facets of the property game; from managing risk, savings buffers, cashflows, tax positions, and of course, where the family home fits.

Once you have aligned these aspects, you can then determine the –

• macro location such as the city or state that best suits that price range,
• your goals for the property itself for yield and growth,
• considerations such as minimising land tax,
• owning in different locations for diversification,
• factoring where different cities are sitting in the property cycle

You can only take this macro view and planning approach to your next purchase strategy if you start with goals and a long-term plan.

Mistake number three is allowing emotions to dictate decisions. There are many ways in which emotions can creep up on us. To name just a few, bias can grip, sometimes it’s fatigue, and other times it could be fear of missing out.

Dave shares some examples that he’s seen people fall prey to over the years.

“This often happens when we don’t have long-term goals to keep us focused and maintain perspective”, says Dave.

How can buyers balance their emotions and avoid mistakes? Mike’s tips are simple and objective, but not easy to adopt without a clear plan.

Mistake number four: Believing in the get rich quick myth. Dave sheds light on some of the short-term victories that seem enticing and he warns that buyers also need to assess the downside risk and be comfortable with it.

Buyers need to be very wary of a range of spruikers too; some will promise double digit returns, while others could be masquerading as advisors while they sell off a stock list.

“Short-term investments carry high risks, from unpredictable market conditions to expensive renovations to blow outs in costs for developments.

It requires significant expertise and resources.

Unless you are a successful developer, you generally need to adopt a “get rich slow” mindset.”

Lastly, mistake number five relates to accumulating properties without considering cashflow and savings buffers. Dave’s experience with investors shines through when he lists a variety of scenarios he’s witnessed over the years in relation to large property portfolios. While many investors get it right, there are plenty who don’t. Our recent economic conditions have placed pressure on some multi-property investors and Dave has some good words of wisdom four those who place a value on a large portfolio.

.…. and our gold nuggets!

Dave Johnston’s gold nugget: The key to property investment success is to view it as a series of informed strategic decisions that align to your short and long term goals.

Mike Mortlock’s gold nugget: Mike relates an investor scenario to the recent Block series

Cate Bakos’s gold nugget: Emotion counts for so much and Cate suggests that there is only one type of property that buyers should be emotional about. “You should be entirely emotional about buying your home. Make sure you buy a property that you love. But for your investments, you don’t have to love them. You just have to be proud of them.”

Resources:

If you enjoyed this episode, you may like to go back to enjoy these eps!

4: How to develop your own Property Plan – start with the end in mind!

31: Get rich quick schemes – No.1 of the top 7 Critical Mistakes

32: Misunderstanding what makes a good property investment – No.2 of the top 7 Critical Mistakes

33: Starting without a plan and end goal – No.3 of the top 7 Critical Mistakes

34: No mortgage strategy – No.4 of the top 7 Critical Mistakes

35: Emotional decision making – No.5 of the top 7 Critical Mistakes

36: Buying the wrong property and/or the wrong location – No. 6 of the top 7 Critical Mistakes

37: Needing to sell property too soon – No. 7 of the top 7 Critical Mistakes

92: Property planning and your next purchase – critical considerations and why modelling financial outcomes is vital to success

Upcoming ep – #291: The Truth About Building Inspections – What They Reveal, What They Don’t and How to Ask the Right Questions