How 0.9% of property investors are different?
In the earlier post we spoke about how many property investors there are in Australia and how many properties they own. The most important highlights that we should take away from that statistic is that over 70% of property investors never make it past their first property and that less than 1% of property investors own 6 or more properties. You may wonder why there is such an abyss between those two groups of property investors? Why is that both groups are buying real estate but their results are poles apart? How property investors are different? What makes a successful property investor and what should you know to increase your chances of getting into the 1% of property investors?
There are many reasons that set the successful property investors apart, yet I would like to cover only a handful that make the biggest difference in my experience.
Reason 1: They build a team around themselves
Have you considered finding, purchasing, managing, renovating or perhaps doing tax returns for the property yourself? I am a strong believer that we should only be doing things that give us the greatest return and outsource everything else. The reason is simple, – we only have 2 hands, 24 hours in a day and we need to spend it wisely, so I suggest that we put it to the best use we can. If you want to be successful you need to surround yourself with people who are smarter and more experienced (in their niche) than you are. Once you have the team, you need to let things go and put trust in others.
I have been asked multiple times if I have seen (in person) or inspected our properties before they were purchased. It is fascinating to see the people’s reaction when I say – ‘not a single one’. I have simply found people who I can trust to deliver consistent result every time.
There is a great saying that I truly believe in:
If you’re the smartest person in the room, you’re in the wrong room.” – Unknown
Reason 2: They make decisions and take action
This may come as the most obvious reason of the lot, yet many of us find reasons not to take action and keep procrastinating hoping that things would change one day. Things do not change unless we change them and to achieve that we need to make decisions and take action. If you have made a decision but haven’t followed it though with an action, it is no different to not making a decision at all.
This is the most obvious and yet the most common anchor that is holding many of us back. This is a single biggest reason successful property investors are different. Being an action taker is not really property investment specific as it affects all the areas of our lives. If there was one reason I had to choose to top my list of traits of successful people this would be right up there, with no competition whatsoever.
Reason 3: They have a system that works
There are number of strategies that could make your property investment journey fruitful and I will share the strategy that I use in one of my later posts. The trick is to find the strategy that works for your personal circumstances and stick to it despite all the noise and distractions. The beautiful thing is that you do not need to come up with the strategy yourself as there are many smart people out there that have paved the way for you already. All you need to do is to find someone who has done it successfully before and replicate the process over and over again. This may sound boring, but the truth is that property investment should not be exciting and you should not feel the need to experiment or speculate. What you need is a system that makes your investment results more predictable and consistent.
Reason 4: They never stop learning
We usually stop actively learning when we become comfortable with our life or when we achieve the results we aimed for. For instance, it happens mostly post university graduation or when we get the job that we always wanted. Have you considered where would you be today if you had decided to keep the momentum and your learning pace after achieving those goals?
Warren Buffett is a great example that I admire to read and learn from. He started his investing career by reading up to 1000 pages a day. Even now, he spends most of his day reading. I am not suggesting anything as radical, yet the importance of self-education cannot be underestimated.
In addition, successful investors do not believe in failing, every experience is a chance to learn, this is how they grow and progress.
The only real mistake is the one from which we learn nothing.” – Henry Ford
Reason 5: They have a different mindset
I know that this reason is pretty broad and there are many things that contribute to your mindset, yet some stand out more than others.
For example, successful property investors are big picture thinkers. They are playing a long-term game and are not overly concerned with the intermediate market movements or quick wins.
They take the full accountability for their life and refuse to believe that external circumstances or luck are creating the life for them. Instead, they create circumstances that work for them so that they can have the life that they want.
They understand the power of leverage and that in order to create a substantial asset base they must borrow considerable amounts of money. This is done pragmatically, with having all the necessary risk mitigation strategies and buffers in place.
They prioritise capital growth over cash flow. Do not get me wrong, I believe that cash flow is important as it keeps you in the game, yet it is the capital growth that makes you wealthy.
And lastly, – they treat property investment as a business. This means that all the rules that you would normally apply to running your own business must also apply to property. At the end of the day the ultimate objective of investing in property is to improve your financial position, so we need to stay focused and never lose sight of it.
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