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Fellow investors, we’ve lost focus

Posted by Paul Wilson

Don’t read this if you want to know where to invest in 2015, because I’m not going to tell you. It’s not because I can’t identify which suburbs have potential for growth, it’s simply because I believe the hyped up hotspot predictions go against the true art of property investing.

This year, I’m bringing basics back (and maybe sexy, too).

The alarming thing about posts containing hotspot predictions is that a) fresh-faced investors believe every word that’s being said, and go on to invest in those areas based on that advice, in property which often lacks true, standalone property fundamentals; and b) seasoned investors are also getting carried away which is worrying.

Let me say this loud and clear: property is a 10 to 15 year asset class. It requires time, patience, the ability to think long-term and the discipline to stick to your plans.

Yes, you can make money flipping houses, but there are many investors who can still enjoy a large amount of success from property investing, without implementing the more aggressive and higher risk strategies. Hype and hope are designed to sell and let’s face it, you simply don’t hear about the disasters of wanna-be renovation stars who over capitalise on their fast-track, property flip strategies.

Hotspots undeniably marry with this method, but the dangerous catch is that it’s the only wave you can ride, and once the tide goes out, you’re beached.

The good news is that you can invest in what some might consider the plain old boring methods and still enjoy exceptional results.

Property is a long-term commitment and an income model that does involve risk, but of a much lower level than other methods and asset classes. If you enter the property market with a share-mindset thinking you can just sell off the toilet when the going gets tough, then this asset class is not for you.

Throughout the ownership of your property there will be peaks and troughs, but if your method is to hold, in the end it won’t matter. The property cycle is a beautiful thing, and if you invest well based on location, infrastructure and population, those fundamentals will carry you through.

Last year I had so many clients trying to read the tea leaves, asking me minute questions that don’t matter in the bigger picture.

It was almost as if they were expecting me to tell them which day of the month to invest.

Remember: time is everything, timing is not.

It’ll be refreshing to see the property world wake up out of its tunnel-vision thinking, and into a sensible, old-school investing mindset that has proven time and time again to prevail over the delusional hotspot.

If you only make one New Year’s resolution for this year, make it to read the children’s story of The Tortoise and the Hare.

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