Last week, my friend Tim Franklin achieved his goal of running around the world. Here’s a link to the blog I wrote about Tim and his incredibly audacious goal when he began that journey 576 days ago.
The more successful someone is, the more obvious the reasons for their success.
Many people seek to become successful by copying what successful people do and what they achieve. I think that’s a mistake. Why? Because copying what successful people do will only get you so far.
To me, the more important thing to copy from a successful person is not what they do but the way they think … their mindset.
Throughout my career, I’ve had the good fortune of meeting many fellow Australians who have more than 10 investment properties in their portfolio. Quite the achievement given there are only 2,189 of them in a population of more than 27 million.
These investors, as successful as they are, don’t have a lot in common. Some are low-income earners, some are high-income, some started investing young, some started at a later age, some started without owning a home and some were homeowners.
The commonality among them, however, is their mindset. Specifically, these high achievers set a goal, and work out a way to achieve that goal, all the while focussing on the big picture. They never ever lose sight of what their strategy is along the way.
I’ve not been on the receiving end of advice about what to do, especially not from a successful investor. But I have received advice on how to approach a given problem or make a choice.
To borrow a term from American writer and humorist Mark Twain: History might not repeat… but it does rhyme.
Buy the first property, manage the cash flow, and then repeat the process as often as you’re able, holding the properties as long as you’re able. That is my own personal experience and book Bulletproof Investing summarised in a sentence.
Sounds straightforward right? Not necessarily.
The median house price in Sydney in 2000 was $328,000. Fast-forward to today and the median house price in Sydney is approaching $1.5 million (note: the median house price is the price for house on a block of land; i.e. it excludes units and townhouses).
The property you bought in Sydney in 2000 for $328,000 is likely worth more than $2 million today because the median these days sits on a smaller block of land further from town.
The property has increased in value five times in 24 years! Imagine how many more properties you could have bought between then and now, following the above strategy.
Despite this, the number of Australians who own more than three investment properties have barely budged.
The number of Australians who owned an investment property in 2000 was 1.16 million, while the number who owned more than three investment properties during that same year was 30,000.
I say more than three because I believe the average Australian needs at least four investment properties to become financially independent.
Today, 87,000 Australians own three or more investment properties.
So, what that means is that just 47,000 people out of 1.16 million people have turned their one property from 1990 into more than three today.
This is despite the value of their property increasing five times in 24 years.
So, once again I reiterate what I said earlier, it’s not enough to simply copy what successful people do.
In saying that, please don’t get me wrong, buying a property in Sydney in the year 2000 was better than not buying a property, but those who did just that will find that it has likely not been enough to assist them in finding financial independence.
So, why didn’t more people get to the four or more club?
Let me tell you something, the average property investor usually sells after seven years. On top of that just one in two property investors don’t purchase land and that is the part of a property that grows in value.
Further to this, one in every two property investors is not cash flow positive, a fact no doubt linked to the average property investor getting the seven-year itch to sell.
There will be more reasons, no doubt. I’d say the common theme would be a lack of guidance.
I say it religiously, but it’s imperative to have a mentor. And here is proof of that. Every property investor I know with 10 or more properties has a trusted mentor or guide; be it a family member, close friend or professional who has done it themselves and guided their mentee along.
We don’t know what we don’t know, and no one has a crystal ball.
We cannot eliminate risk, but we can manage or reduce it. You can’t learn to do this by simply copying what people have done in the past. However, you can learn how to approach new risks effectively.
The past never repeats, but it does rhyme.
Menu
