I keep having a conversation with people lately about why they’re afraid of investing in property, so I thought it was worth looking at the main thing holding them back.
BY JANE SLACK-SMITH
“Come to the Edge” by Guillaume Apollinaire
“Come to the edge.” he said.
“We can’t. We’re afraid.” they said.
“Come to the edge.” he said.
“We can’t. We will fall!” they said.
“Come to the edge.” he said.
And they came.
And he pushed them.
And they flew.
This quote has always been one of my favourites because it hits on three key points:
1. Firstly, with anything new there’s fear – accept that.
2. You need to recognise what the fear is and what it’s preventing you from doing before you can do anything about addressing it.
3. Finally without a push you remain stagnate and may never get the chance to fly.
Be it learning a new sport or property investing, sometimes the push you need is from inspirational words in a book, sometimes it’s the confidence you get when you learn the tools and master the techniques, or sometimes it may be a mentor, someone who coaches you.
Over the past five years I’ve taught thousands of property investors and in general there’s one main reason why people hesitate when it comes to investing. This one thing often manifests in ways I have found to be common.
Do any of these sound familiar?
1. My partner isn’t supportive and won’t discuss property investing.
2. We/I tried it once and it didn’t work out.
3. I keep trying to pick the market but every time I go to act I seem to have missed the boat.
4. I can’t afford it.
Each of these come down to a single thing – fear. The fear of losing money, essentially the fear of getting it wrong.
This is absolutely a legitimate concern because let’s face it, property will be the most expensive thing you will ever buy and if you get it wrong there goes all your hard earned savings and it could take years to recover.
Many of us are acutely aware that we can’t depend on our superannuation or government pension and hence we need to get involved and actively contribute to our financial security.
In my mind you need to do a few things to address this fear.
1. Start with the end in mind. Work through with your partner or by yourself where you ultimately want to be. In fact after you complete this simple conversation you might find out a few interesting things. Firstly what your partner’s concerns actually are and also that property investing may not be the way to achieve your goals. At least you know and you can assess other options.
2. Determine your strategy.
So how are you going to pull this off? Which property investing strategy suits your goals and timeframes? Maybe it’s negative gearing, positive cash flow, or both, off the plan, renovation and hold, renovation and flip, buy and hold, land banking etc. Then work out how much you need to make a start and get saving.
3. Be prepared. Successful property investing is hard work especially initially, so be prepared and understand it will require lots of time and work.
4. Consider your exit strategies – not just the long term one but also your emergency exit strategy and plan for that emergency situation. As the saying goes “an ounce of prevention is worth a pound of cure”. Create buffers for yourself so if things do go wrong you don’t have to sell immediately, you can wait until the market is where you want it to be when you sell.
5. Minimise your risk. For 15 years I was an explosives engineer. Everything was assessed by evaluating what the worst thing that could happen was and what measures could be put in place to minimise the risk of that happening. I apply that same criteria to every investing decision I make, because after all if you minimise your worst fear to an acceptable level then what’s preventing you from taking action?
In summary, get aligned with your significant other and determine why you’re putting in all the hard work, formalise how you’ll achieve your goals and where the funds will come from and finally work through all the ‘what-if’ scenarios.
Remember you have the opportunity to fly, you just need to overcome your fear and take the leap.
Jane Slack-Smith is the director of Investors Choice Mortgages. She’s a mortgage broker and runs property investing courses throughout Australia. Visit: www.stepbysteppropertysuccess.com.au for details.
