Six Reasons Most People Will Never Get Rich …and How To Make Sure You Do!
by Michael Yardney
Having worked with hundreds and hundreds of property investors over the years, I discovered that successful property investors do things in a certain way that helps them become rich while others continue do things differently and in general they tend to struggle.
I’ve come to the conclusion that when you do what most successful investors do, you get to become one of them, and if you don’t, you won’t.
So lets look at six simple reasons most people will never get rich and how to make sure you do:
Reason 1 – Most people wait to long to start:
Most people can’t wait to succeed, yet they are willing to wait to get started on the road to success.
Many investors are waiting for everything to be “perfect” before they get going. They wait for the right time in the cycle, the right property, the right economic environment or the right interest rates. Which means they never get going.
The longer you wait to get started with your investing, the longer it will be before you get the money, success and freedom you want. It takes time to grow real wealth. It takes time for the power of compounding to work its magic.
You need to understand that the timing will never be perfect or you will never have all the information you want. You need to develop the confidence to make an investment decision based on knowing enough and realising that you will learnt he rest along the
Reason 2. Fear stops them
Fear keeps many of us from getting what we want, especially in matters of money. It’s true for me and it’s true for you.
Be honest with yourself and count the number of times fear has prevented you from taking action, and in the process cost you a lost financial opportunity.
In the matter of property investment fear holds many investors back. Some fear taking on more debt, others fear failure and some even have a fear of success (will my friends still like me?)
Successful investors have learned to harness their fears and rather than focus on the negatives, they use fear to force them into positive action. For example, rather than allowing fear of debt to stop them taking on the commitment of buying a property they use the fear of not moving forward with their investments to motivate them. They use the fear of being stuck in their job for the rest of their lives, without the financial independence that they are craving, to motivate them to take on the commitment of an investment property.
Just like a river, fear can be bridged. The river of fear is only as deep and as wide as you allow it to be. And once you’ve crossed that river of fear and experienced the success on the other side, you usually look back and wonder why you were ever afraid.
But here’s the catch. The only people who actually realise this are those that have crossed the river and stand on the other side.
Money and success lives on the other side of fear.
Reason 3. Waiting until they know enough
The fear of not knowing enough prevents other investors from getting started.
However the irony here is that the more you learn, the more you learn that you don’t know! Once you start learning some basic investment concepts you suddenly realise there are a whole lot more things about investing or property that you don’t understand.
That’s the paradox of knowledge. The more you learn, the more you learn you don’t know. The trap is that many investors think that the way to escape this paradox is to learn even more, so they read more books, go to more seminars, listen to CD’s and watch DVD’s.
As they learn more they find a whole heap more things they don’t yet know.
The way out is to recognize that while you don’t know it all, and you never will, you do know enough to get started with your investing and you will learn more along the way as you apply your knowledge in the real world, surviving any mistakes and challenges along the way.
Reason 4 – Focusing on linear income instead of passive income:
It is important to realise that not all income is created equal. Some streams are linear and some are passive.
Linear income is what you get from a job. You work for an hour and get paid once for that hour’s work, and that’s it. If you don’t turn up to work you don’t get paid.
Passive income is when you work once but continue to get paid over and over again from work you’re no longer doing. The way to become wealthy is having passive income coming in whether you go to work or not.
Wouldn’t it be nice to be paid hundreds of times for every hour you work?
That’s what happens to property investors. Initially they work long hours and save up a deposit and then invest it into a property. Now their money starts working for them and keeps giving them sound investments returns “passively” in the form of capital growth and rental returns. Rather than getting another job, the wealthy people know they need to send their money out to work for them.
To put it simply “if you’re not making money while you sleep, you’ll never become rich.”
Reason 5 – Not using systems for making money:
A system for making money is something that takes the emotion out of your investment decisions and makes the results more reproducible.
My preferred system is investing in high growth property. In particular I invest in high growth properties in areas that are in the upturn stage of their property cycle. I buy them below replacement cost and then add value through renovations or redevelopment. I never sell these properties. I borrow against the increasing equity in my property portfolio to buy more properties.
Once you create a proven system for making money, there is no limit to the money you can make.
Reason 6 – Not being patient
Warren Buffest once said: “wealth is the transfer of money from the impatient to the patient.”
To become a successful property investor requires patience and persistence. You must not only get started, but you must continue on and follow through.
Residential property is a long-term investment. It’s not a get rich quick scheme.
Yet many investors speculate rather than invest. They look for that “big deal” which will land them a jackpot in a short period of time. In general these types of deals rarely occur and if you find one are speculative in nature and more risky.
The problem for many investors is that the successful buy and hold strategy I advocate is boring and others consider it slow. But successful property investment is a long-term affair.
Many investors look for the latest fad or try finding the next hot spot or speculative growth areas. Other investors consider other types of investments with potentially higher returns.
When you are tempted to do this remind yourself that real estate has been the number one long-term multi-millionaire maker throughout Australia’s history, yet most people that speculate in the latest fads have not made much money.
You don’t have to look for the latest fads or the latest speculative growth areas if you create your own capital growth through buying a good property at a fair price, then adding value through refurbishments, renovations or redevelopments. By doing this you are manufacturing your own capital growth.
So, it’s really quite simple…
Decide to do these six things that successful property investors do and you are much more likely to become a successful and wealthy property investor. If you don’t do them, then like most people, you may never get rich.
Metropole Property Investment Strategists
Visit our website: www.metropole.com.au