Please use the menu below to navigate to any article section:<\/p>\n<\/div>\n
Each year brings its own set of wins, challenges, and lessons to learn and 2021 was certainly no exception.<\/strong><\/p>\n It\u2019s been an extraordinary year hasn\u2019t it?<\/p>\n Looking back to this time last year, we thought we had this Covid \u201cthingy\u201d licked didn\u2019t we, but look what then transpired.<\/p>\n Nobody could have foreseen all that\u2019s happened, including the coronavirus, its economic fallout and the way our lives changed.<\/p>\n But as we head into 2022, I can\u2019t help but reflect on what Australia as a country has accomplished and what I\u2019ve achieved personally, what I\u2019ve overcome, and the lessons I want to carry with me into the New Year.<\/p>\n Here are my top 21.<\/p>\n Every year an unexpected X factor comes out of the blue to undo the best laid plans \u2013 sometimes on the upside (like the miracle election result in mid-2019) and sometimes on the downside like Covid19 in 2020 or the Delta outbreak in 2021.<\/p>\n Strategic investors try and protect themselves from these surprises by owning the best assets they can, having financial buffers in place to ride through the ups and downs of the property cycle, setting up the right ownership structures, insuring themselves \u00a0and obtaining holistic advice from their consultants.<\/p>\n But the biggest risk is what no one sees coming<\/strong>, because if no one sees it coming no one is prepared for it and if no one is prepared for it, it\u2019s damage will be amplified when it arrives.<\/p>\n While an X factor seems to come every year, a major Black swan event as some call it, one that \u201cbreaks the world\u201d, tends to come every decade.<\/p>\n The strong performance of both our property markets and our share market showed us to ignore the numerous pessimistic property predictions by the so called \u201cexperts\u201d \u2013 don\u2019t make 30-year investment decisions based on the last 30 minutes of news.<\/p>\n Strategic investors have a long-term focus and don\u2019t change their plans based on what\u2019s happening \u201cnow\u201d.<\/p>\n In fact, they don\u2019t buy investments that are working now<\/em> \u2013 they investment in the type of assets that have always worked<\/em>.<\/p>\n In other words, they don\u2019t chase the next shiny toy or the next hotspot.<\/p>\n Clearly this was the thinking behind Warren Buffet\u2019s quote \u201cBe fearful when others are greedy and be greedy with others are fearful.\u201d<\/em><\/p>\n But while that\u2019s easy to say \u2013 it\u2019s not so easy to do.<\/p>\n In my regular blogs on this website and in my podcast and my YouTube videos I called the bottom of our property market in October 2020 and even recommended investing in sound locations during the more challenging times during the pandemic last year.<\/p>\n Anyone who took my advice, and hundreds and hundreds of clients of Metropole<\/a> did, are now looking pretty smart as in many cases the value of the properties have increased by more than 25%.<\/p>\n Remember\u2026 it\u2019s media\u2019s job to get eyeballs on the advertisers\u2019 content, rather than to educate you.<\/p>\n However, when the pandemic first hit, many of us watched the 6 o\u2019clock news, and then the 7 o\u2019clock news to see if there was something different reported and then maybe the 7:30 Report to get another angle on what was going happen to our health, our economy and our property markets.<\/p>\n Think about it\u2026 how many of those expert\u2019s forecasts came true?<\/p>\n But look how many people worried and stressed about the potential outcomes that just didn\u2019t occur.<\/p>\n And unfortunately being overwhelmed with misinformation led many people to live in a state of fear and anxiety and caused some to make disastrous investment errors.<\/p>\n Remember all those forecast that unemployment would reach 10% to 12%? What about those forecasts of property values dropping 20% or more?<\/p>\n They didn\u2019t come to fruition, did they?<\/p>\n Similarly, if you\u2019re reading something frightening in the business section, or hearing it on TV, or learning about it from your neighbour, it\u2019s almost certainly too late to act \u2014 because the information is already reflected in market \u2013 in either the share price or property prices.<\/p>\n There will always be someone out there telling you not to invest in property.<\/p>\n Last year, in 2020 at the beginning of the pandemic, the doomsayers found their moment and told us how our property markets would crash \u2013 they were wrong of course .<\/p>\n Now they\u2019re out once again telling us that inflation, rising interest rates and mortgage defaults are going to create the property market to crash.<\/p>\n There\u2019s nothing new about these doomsayers who have been peddling their forecasts for a decade or two.<\/p>\n There will always be somebody wanting to stall the aspirations of their fellow Australians who are looking to take their financial futures in their own hands and do something about it.<\/p>\n Don\u2019t let them stop you achieving your financial dreams \u2013 the doomsayers are always wrong, at least in the long term.<\/p>\n Be careful who\u2019s forecasts you listen to.<\/p>\n There are 25 million property experts in Australia \u2013 everyone seems to have an opinion about property, don\u2019t they?<\/p>\n But you know what they say about opinions\u2026 they\u2019re like belly buttons; everyone has one but they\u2019re basically useless. \u00a0So be careful who you listen to.<\/p>\n Of course last year even the respected economists got their predictions wrong when they predicted significant drops on our property market.<\/p>\n And even earlier this year most of the economists did not foresee how strong our property markets would grow.<\/p>\n So as a real estate investor, while it\u2019s important to have mentors make sure you\u2019re listening to somebody who has not only built their own substantial property portfolio, but someone who has kept their wealth through a number of cycles.<\/p>\n There are just too many enthusiastic amateurs out their offering investment advice at present.<\/p>\n There are multiple markets in Australia, and each state is at a particular stage of its own property cycle and within each state there are multiple submarkets depended upon price point, geography and type of property.<\/p>\n But there\u2019s nothing new about this\u2026 local factors have always driven property market performance.<\/p>\n So avoid paying attention to commentary that gives broad generalisations about the Australian property market or even the Melbourne, Sydney or Brisbane property markets.<\/p>\n Even though they are armed with all the research available in today\u2019s information age, economists never seem to agree where our property markets are heading and usually get their forecasts wrong.<\/p>\n That\u2019s because market movements are far from an exact science.<\/p>\n It\u2019s more than just fundamentals (which are relatively easy to quantify) that move markets.<\/p>\n One overriding factor the experts have difficulty quantifying is investor sentiment.<\/p>\n So rather than timing your investment purchases (or sales), if you buy the right investment-grade assets, time in the market is much more important than timing the market.<\/p>\n And if you think about it, the top and the bottom of the market are really only one or two days or weeks or months in the cycle.<\/p>\n \u201cCrowd psychology\u201d influences people\u2019s investment decisions, often to their detriment.<\/p>\n Market sentiment is a key driver of property cycles and one of the reasons why our markets overreact, overshooting the mark during booms and getting too depressed during slumps.<\/p>\n Remember that each property boom sets us up for the next downturn, just as each downturn sets the scene for the next upswing.<\/p>\n While low interest rates and easy access to loans drove our property markets over much of 2021, the rules of the game are changing with APRA<\/a> once again interfering to slow down our housing markets.<\/p>\n Moving forward it is likely that APRA<\/a> will bring in further macroprudential controls.<\/p>\n This means now is a great time to speak with an investment savvy mortgage broker to ensure you have the right finance in place for your existing property loans.<\/p>\n Maybe you should consider locking in a portion of your interest rates at today\u2019s low rates.<\/p>\n I\u2019m not suggesting you try and time the interest-rate cycle, but I always lock in a portion of my loans on fixed interest rates to secure my cash flow.<\/p>\n Capital growth should be the key driver for your investment decisions, rather than cash flow.<\/p>\n Sure cash flow is important and will keep you in the game, but it\u2019s capital growth that gets you out of the rat race.<\/p>\n So smart investors first build their equity and then they convert it to cash flow.<\/p>\n Our analysis proved that, over the medium to long term, properties with lower rental returns (but stronger capital growth) delivered significantly higher overall return (i.e. capital growth + rental return), while \u201ccash flow properties\u201d with high rental returns delivered lower ones overall.<\/p>\n What this means is those who invest in the more affordable suburbs that deliver a high level of rental return, with the expectation of strong overall returns, achieve exactly the opposite result.<\/p>\n This also highlights the significant opportunity cost in having underperforming assets in your portfolio.<\/p>\n If you can only afford to own 2 or 3 properties, make sure they are all \u201cinvestment grade\u201d properties that are working hard for you.<\/p>\n Moving forward I can see we were going to have a two tier property market. <\/strong><\/p>\n In many locations property values have already increased to 20% or more this year but wages growth has been minimal.<\/p>\n This means the average Australian won\u2019t have any more in their paypacket to be able to pay $300,000 more for a property.<\/p>\n If Coronavirus taught us anything, it was the importance of living in the right type of property in the right neighbourhood.<\/p>\n They will look for things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs all within 20 minutes reach.<\/p>\n Residents of these neighbourhoods have now come to appreciate the ability to be out and about on the street socialising, supporting local businesses, being involved with local schools, enjoying local parks.<\/p>\n As obtaining finance becomes more difficult moving forward, it will be the people with money that drive property prices.<\/p>\n Not just locals living in the area but people who want to move into these better locations.<\/p>\n You see\u2026there will always be wealthy Australians who will be able to and prepared to pay more to live in these better locations \u2013 rich people don\u2019t buy cheap properties.<\/p>\n Currently the high end of our property markets is leading the growth in property values and the the gap will only widen between the more expensive aspirati<\/p>\n Every year brings its own set of crises and lots of reasons not to invest.<\/p>\n You can go back as far in history as you like and there won\u2019t be a crisis free year.<\/p>\n Sure some years are worse than others, but there is always bad news and much of it is unexpected.<\/p>\n Where investors get into trouble is that rather than focusing on their long-term goals, they see these crises as once in a generation events that will alter the course of history, when in reality they are just the normal path of history.<\/p>\n The last decade reminded many property investors that real estate is not a way to get rich quickly.<\/p>\n It was a long period between the last property cycle peak 2017 and October 2020, when property prices remain flat and in fact fill in many locations<\/p>\n I found it takes the average property investor around 30 years to become financially independent, but most don\u2019t make it because they can\u2019t stay the distance in part because they don\u2019t have good cash flow management.<\/p>\n Many people get into property investment to improve their cash flow position, but if they don\u2019t have good money habits to start with taking on more debt only compounds the problems.<\/p>\n As a property investor, I protect myself from the challenges to our property markets brought about by the pandemic by:-<\/p>\n Fortunately, I didn\u2019t need to rely on these protections I put in place long before the challenging times, and having them in place helped me sleep much better.<\/p>\n But I\u2019ve learned to protect myself and my investments because\u00a0 I don\u2019t make forecasts \u2013 instead I have expectations.<\/p>\n Now there\u2019s a big difference between forecasts and expectations.<\/strong><\/p>\n I expect there to be another recession in the next decade.<\/p>\n But I don\u2019t know when it will come.<\/p>\n I expect the property market to boom over the next few years and then prices will tumble again. But I don\u2019t know when.<\/p>\n I expect that some investments I will make won\u2019t do well.<\/p>\n But I don\u2019t know which ones they will be.<\/p>\n I expect interest rates will rise. Probably not for a number of years. In fact, I don\u2019t know when.<\/p>\n And I expect another world financial crisis.<\/p>\n But I have no idea when it will come.<\/p>\n Now these are not contradictions or a form of cop out!<\/strong><\/p>\n As I said\u2026there\u2019s a big difference between an expectation and a forecast.<\/p>\n An expectation is the anticipation of how things are likely to play out in the future based on my perspective of how things worked in the past.<\/p>\n A forecast is putting a time frame to that expectation.<\/p>\n Of course, in an ideal world we would be able to forecast what\u2019s ahead for our property markets with a level of accuracy.<\/p>\n But we can\u2019t, because there are just too many moving parts.<\/p>\n Sure, there are all those statistics that are easy to quantify, but what is hard to identify is exactly when and how millions of strangers will act in response to the prevailing economic and political environment.<\/p>\n Then there will always be those X factors that crop up.<\/p>\n So I plan for the worst, but expect the best.<\/p>\n You\u2019ve probably noticed that successful\u00a0investors,<\/span> business owners and entrepreneurs enjoy multiple streams of income. <\/span><\/p>\n They strategically go to great lengths to make sure they have money coming in from all directions, or in other words \u201cthey don\u2019t have all their eggs in the one basket.\u201d<\/span><\/p>\n Unfortunately many Australians learned this lesson the hard way over the last few years, with some losing their jobs, others having their work hours cut back and yet others losing their life savings as many small businesses went broke.<\/p>\n And even though we are through the worst of the economic downturn related to this Covid pandemic, there will always be issues to contend with.<\/p>\n It may not be a pandemic next time, but it could be personal health issues or your inability to work.<\/p>\n Sure, it\u2019s hard enough for some people to figure out how to create a single source of income, little loan multiple streams, but in my mind you have no choice.<\/p>\n Rather than relying on your job as an income source become financially fluent, learn to invest and develop multiple streams of income.<\/p>\n Don\u2019t be afraid of failing, because the biggest risk is not doing anything to protect your financial future.<\/p>\n Sometimes negative experiences, mistakes and failures can be even better than a success because they teach you something new which another win could never teach you.<\/p>\n Instead we spend our time wishing we had done it differently.<\/p>\n Or not doing anything at all because the fear of making mistakes paralyses us. If you get it wrong, learn from your mistake and make it count by doing it differently next time.<\/p>\n One \u201cfailure\u201d can \u2013 with time \u2013 help you create many successes.<\/p>\n Life is not fair \u2013 get used to it.<\/p>\n But having said that, optimists are more successful in all areas of life than pessimist, or so-called realists (who are just pessimists in disguise). And this includes in the realm of investing.<\/p>\n Now this doesn\u2019t mean that you will necessarily be happy and smiling all day.<\/p>\n But it does mean that you have an ability to look at a situation and while it might be tough, you\u2019re able to see around that corner and see the possibilities\u2026rather than the difficulties.<\/p>\n Those who have high expectations usually rise up to meet them.<\/p>\n We all have 1,440 minutes every day, but some of us squander it, waste it or don\u2019t use it efficiently.<\/p>\n The lockdowns of the last 2 years reminded me how truly valuable time is.<\/p>\n You can lose money and get it back again, if you\u2019re sick you can often get your health back again, but once the time has gone it is gone and is irretrievable.<\/p>\n Start to capitalise on the time you have and get a whole lot more done.<\/p>\n Just because you\u2019re doing a lot doesn\u2019t mean you\u2019re getting a lot done \u2013 I found many people just seem to be running in the same place.<\/p>\n Interestingly working from home has made me much more efficient, I get a lot more done in those 1,440 minutes I have every day.<\/p>\n Another way of looking at time was brought home to me in 2021 and that it that life is short.<\/p>\n On some level most of us know that life is short, but 2021 taught us and solidified the fact that we don\u2019t get a second chance and the importance of truly appreciating what and who we have in our lives whilst living to the fullest.<\/p>\n We all face changes every day \u2013 whether it\u2019s a simple as a change in the weather or something as significant as another wave of the coronavirus pandemic.<\/p>\n Changes are a normal part of life; the problem is most of us don\u2019t like change \u2013 we like certainty.<\/p>\n I\u2019ve come to realise that it\u2019s not the circumstances or the changes that dictate how my life will go, but rather how I handle those changes and disruptions.<\/p>\n Rather than worrying about all the changes occurring, I\u2019ve learned the concept of having a useful belief<\/em> about the changes that are happening to me and seeing what good will come from them.<\/p>\n The more I feel in control of the life my life, the more comfortable I feel and the better I perform in all areas of my life.<\/p>\n Fact is, most things you fear will happen never do. They\u2019re just monsters your mind.<\/p>\n And if they do happen, they\u2019re most likely to be not as bad as you expected.<\/p>\n But forget the saying \u201cdon\u2019t worry be happy; instead worry the right way \u2013 it\u2019s better than not worrying at all.<\/p>\n You see\u2026worry can play important role in your life, and it doesn\u2019t have to be destructive.<\/p>\n We\u2019re all wired to worry.<\/p>\n Those who worried correctly survived and evolved.<\/p>\n But today time spent worrying is time that you could spend identifying opportunities and taking action.<\/p>\n Worrying about the right things can motivate you, but if you find it unproductive, try to take your mind off things by getting engaged in other activities:<\/strong><\/p>\n I\u2019ve learned the trick of limiting the amount of time I worry.<\/p>\n I was taught the concept of telling myself to put a limit of say 5 minutes or 10 minutes on your \u201cworry time\u201d and then forcing myself to move on by focussing on other tasks or engaging in other activities.<\/p>\n It\u2019s a good trick to learn.<\/p>\n How often do we need to hear the world as we know it is coming to an end, before we realise that the world as we know it has not come to an end.<\/p>\n If you\u2019re wondering what\u2019s ahead for property you are not alone.<\/p>\n You can trust the team at Metropole to provide you with direction<\/strong>, guidance<\/strong> and results<\/strong>.<\/p>\n In \u201cinteresting\u201d times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that\u2019s what you exactly what you get from the multi award winning team at Metropole.<\/a><\/p>\n If you\u2019re looking at buying your next home or investment property here\u2019s 4 ways we can help you:<\/strong><\/p>\n1. Expect the unexpected<\/span><\/h2>\n
![\"Panic](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/04\/covid-19-corona-300x138.jpg\")
<\/p>\n2. Focus on the long term<\/span><\/h2>\n
3. It\u2019s the media\u2019s job to entertain you \u2013 not educate you<\/span><\/h2>\n
![\"Modern](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2015\/12\/news-media-coverage-social-online-technology-headline-work-300x219.jpg\")
At the same time my inbox kept dinging with alarmist messages that were uninformed or unbalanced.<\/p>\n4. Take economic forecasts with a grain of salt<\/span><\/h2>\n
5. Don\u2019t believe the Doomsayers<\/span><\/h2>\n
![\"Recession\"](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/04\/recession-300x189.jpg\")
Don\u2019t listen to these Property Pessimistic and Negative Nellies \u2013 the so called \u201cexperts looking for a headline\u201d who keep telling anyone who would listen to them the real estate Armageddon is ahead of us.<\/p>\n6. No one really knows what\u2019s going to happen to the property markets<\/span><\/h2>\n
7. There is no such thing as the \u201cAustralian property market.\u201d<\/span><\/h2>\n
![\"Houses](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/12\/houses-property-market-300x162.jpg\")
This means that despite all Australians enjoying the same low interest rate environment, the same tax system and the same government, some property market outperformed others significantly in 2021.<\/p>\n8. Don\u2019t try and time the market<\/span><\/h2>\n
9. The crowd is usually wrong<\/span><\/h2>\n
![\"Oliver](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2019\/10\/oliver-people-300x220.jpg\")
Investors tend to be most optimistic near the peak of the cycle, at a time when they should be the most cautious and they\u2019re the most pessimistic when all the doom and gloom is in the media near the bottom of the cycle, when there is the least downside.<\/p>\n10. Property Investment is a game of finance with some houses thrown in the middle<\/span><\/h2>\n
11. Invest for Capital Growth<\/span><\/h2>\n
![\"Growth\"](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/09\/growth-300x163.jpg\")
At Metropole<\/a> our 40 year analysis of investment returns shows that properties with higher rental yields generally deliver low overall returns for investors.<\/p>\n![\"Covid](\"https:\/\/cdn.statically.io\/img\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/06\/covid-corona-300x194.jpg?quality=70&f=auto\"\/)
In our new \u201cCovid Normal\u201d world, people will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.<\/p>\n12. There will always be reasons not to invest<\/span><\/h2>\n
13. Property investment is risky in the short-term, but secure in the long term<\/span><\/h2>\n
![\"Long](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2018\/11\/long-term-300x200.jpg\")
Yet those who stay in the game benefit from the power of compounding growth which builds wealth but takes time.<\/p>\n14. Plan for the worst and look forward to the best<\/span><\/h2>\n
\n
15. You can\u2019t rely on one stream of income<\/span><\/h2>\n
16. There are always risks associated with investing<\/span><\/h2>\n
![\"House](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2019\/07\/increase-the-rent-300x200.jpg\")
However, we are often so driven to get things right that we fail to see the value in the things we get wrong.<\/p>\n17. Cautious optimism is better for your investment health than perma pessimism.<\/span><\/h2>\n
18. Time is a limited resource \u2013 don\u2019t waste it<\/span><\/h2>\n
![\"Time](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/09\/time-is-money-PYYKVVF-300x149.jpg\")
The problem is many people confuse moving with progress.<\/p>\n19. The only certainty is change<\/span><\/h2>\n
![\"Road](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/07\/road-way-300x157.jpg\")
However, learning to expect change has brought me hope during challenging or unexpected life events.<\/p>\n20. Worry Better<\/span><\/h2>\n
![\"Negative](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2019\/08\/negative-work-fail-300x200.jpg\")
That\u2019s because worry had an evolutionary benefit, it drew our attention to the fact that there were some things that you should be doing while there were other things that should be avoided.<\/p>\n21. This too shall pass<\/span><\/h2>\n
Now is the time to take action and set yourself for the opportunities that will present themselves in 2022<\/h2>\n
![\"Metropole\"](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2020\/01\/metropole-1190x692.jpg\")
<\/p>\n\n