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Why isn\u2019t my property growing in value?<\/b><\/p>\n
Why am I missing out on the capital growth other investors are enjoying? ![\"Melbourne](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2021\/08\/melbourne-property-300x225.jpg\")
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Is there anything Metropole Property Strategists can do to help me?<\/p>\n
These are some of the common complaints we hear when prospective new clients approach us to see if we can assist them.<\/p>\n
There are many other common complaints we hear from property investors who\u2019ve not experienced the success they hoped for and turn to Metropole to help them fix their problems, but before I share those it\u2019s worth reminding you that\u2026<\/p>\n
I\u2019ve often said that most property investors \u201cfail.\u201d Fifty percent of those who buy an investment property sell up in the first 5 years and A.T.O Statistics show some interesting numbers for those who stay in the game:
The latest Australian Taxation Office statistics tell us that there are 2,207,893 property investors in Australia, this means <\/span>around 20% of Australian households hold an investment property and 80% don\u2019t.<\/span><\/p>\n Here\u2019s how many properties investors hold<\/p>\n In other words, most Australians who get into property investment never achieve the financial freedom they aspire to, and worse still\u2026<\/p>\n Fact is\u2026Many property investors lose a heap of money and lost opportunities along the way\u2026<\/strong><\/p>\n When many new or prospective clients come to Metropole for advice they bring a litany of complaints with them about their previous experiences.<\/p>\n And since we can all learn from such experiences, I thought it would be worth sharing some, so here are 11 of the common complaints we hear from property investors\u2026<\/p>\n Some complain about having missed the huge capital growth opportunities over the last decade that others, who invested in the right property markets enjoyed.<\/p>\n In general, they owned the wrong properties and didn\u2019t get sufficient capital growth.<\/p>\n Others feel they\u2019ve missed out on the strong capital growth many markets have experienced so far in 2021.<\/p>\n While some bought \u201coff the plan\u201d and overpaid for their property, others bought in regional Australia<\/a> where property values didn\u2019t increase as much as in the \u201cbig smoke.\u201d<\/p>\n Sure\u2026some regional cities performed strongly during the last few months, in light of some changed lifestyle preferences due to Covid.<\/p>\n And I know some \u201cexperts\u201d recommend investing in regional Australia, but I avoid these locations.<\/p>\n Jobs growth is slower<\/a>\u00a0there,\u00a0unemployment is higher<\/a>, wages growth is generally lower and there is no shortage of land.<\/p>\n All this obviously translates to lower population growth, less demand for property, and few growth drivers which lead to capital growth.<\/p>\n Another common complaint we see is investors who had difficulty holding on to their properties because they hadn\u2019t organised their finances correctly and didn\u2019t have a cash flow buffer in place to cover their negative gearing shortfall.<\/p>\n In today\u2019s low-interest-rate environment, holding onto an investment property is cheaper than it ever has been, but sound cash flow management is still important.<\/p>\n My preferred financing solution is to allow you to own high-growth properties and service the cash flow<\/a> shortfall by having a cash flow buffer set aside in an Offset Account.<\/p>\n Then use this facility to fund your property portfolio cash flow shortfall, such as the interest on the property investment loan, or for property expenses and importantly keep it as a \u201crainy day financial buffer\u201d to buy you time if the markets turn sour.<\/p>\n However, to be tax-effective it is critical that you set up your structures correctly, so it\u2019s important to seek professional advice.<\/p>\n Others have complained because they\u2019ve come to realise that they own their investment properties in the wrong entities because they didn\u2019t seek structuring advice prior<\/strong><\/em> to their purchase.<\/p>\n I\u2019ve often said it\u2019s important, to begin with, the end in mind \u2013 what will your property portfolio look like in 10 or 15 years\u2019 time?<\/p>\n Will you be working then, or won\u2019t you?<\/p>\n Do you want to pass a legacy on to your children?<\/p>\n In other words \u2013 in what entities would you like to own your properties then?<\/p>\n Obviously, it\u2019s important to think these things through before you buy your properties and then purchase them in the correct entities.<\/p>\n A complaint that is all-too-often heard is people who have left their investment run late and who are now approaching retirement age and suddenly realise they haven\u2019t built enough of a nest egg.<\/p>\n The worrying reality is that more than half of Aussie baby boomers<\/a> currently believe they\u2019ll run out of money and need the aged pension, while many others will have to significantly scale back their lifestyle.<\/p>\n Clearly, superannuation isn\u2019t going to be enough for most Australians, and it seems like the government isn\u2019t going to be able to fund the type of lifestyle that most of us want in retirement.<\/p>\n One solution is for baby boomers to use the equity in their homes to invest in residential real estate, rather than just trying to pay off their home loans.<\/p>\n Of course, they\u2019ll need to buy the right type of property \u2013 they can\u2019t make the common mistakes most investors make<\/a> as their time frames are tight.<\/p>\n Others come to us complaining they weren\u2019t sure where to turn and have sat on the sidelines through the latest property cycle.<\/p>\n I\u2019ve found many didn\u2019t invest because of information overload \u2013 what some would call \u201canalysis paralysis\u201d they didn\u2019t know where to start.<\/p>\n Others tried to time the property cycle and some were waiting for conditions to be \u201cjust right.\u201d\u00a0 My advice for these would-be investors is not to try too hard to time the property cycle and to remember that Australia is not one property market.<\/p>\n Each state is at a different stage of its own property cycle and in each state, there are multiple property markets \u2013 some geographical, some related to price points, and others related to different types of property.<\/p>\n Sure it\u2019s hard to work out where we are in the cycle and that\u2019s why I recommend getting the independent property investment strategists<\/a> at Metropole<\/a> as part of your team.<\/p>\n Our on-the-ground knowledge of the various state property markets helps cut through the clutter of mixed messages.<\/p>\n Unfortunately, a common complaint we see is from investors who\u2019ve bought a property \u201coff the plan\u201d from a property marketer that hasn\u2019t achieved any capital growth or rental growth in the past five years. Do I believe that buying off the plan<\/a> makes good investment sense?<\/p>\n If you\u2019ve been following my blogs you\u2019ll realise the answer is no.<\/p>\n While a few investors have made money buying off the plan, the landscape is littered with many, many more who\u2019ve regretted their purchase.<\/p>\n Frequently they\u2019ve found the value of their property on completion is considerably less than the contract price and some will have to wait for over a decade before they see any capital or rental growth.<\/p>\n In general, they would have been much better off buying an established apartment rather than a new one.<\/p>\n Many unfortunate investors bought the wrong property because they looked for the next \u201chotspot.\u201d \u00a0 While they may have enjoyed some short-term capital growth, since then property values have dropped as have rentals and they now have negative equity \u2013 especially those who bought in mining towns.<\/p>\n Many of Australia\u2019s worst-performing property markets over the past few years have mirrored the ups and downs of the mining sector<\/a> and many investors have been burned by following the advice of the \u201chot spotters\u201d who recommended them.<\/p>\n I\u2019ve often warned about investing in one-industry locations, such as mining towns.<\/p>\n Not only because they lack multiple growth drivers, but because they tend to be dominated by investors who speculate rather than owner-occupiers who bring stability to the market.<\/p>\n Then there are those investors who didn\u2019t maximise their tax position because they hadn\u2019t obtained a depreciation report.<\/p>\n Depreciation deductions<\/a> can make a real difference for investors helping them reduce their taxable income.<\/p>\n Another regular complaint I\u2019ve heard is from those who\u2019ve tried to save money by using a cheap property manager or by self managing their properties and running into trouble.<\/p>\n A good business owner recognises that they can\u2019t do it all themselves.<\/p>\n They hire a good team of professionals to help them effectively manage their interests and generate the best possible profits.<\/p>\n The same should apply to property investors.<\/p>\n Employing an experienced\u00a0property manager<\/a> will maximise your investment returns.<\/p>\n The internet is littered with stories of investors who succumbed to property spruikers<\/a>\u2019 tactics including high-pressure sales tactics characterised by rushed decision-making and contract signing and the payment of fees (including discounts offered to seminar attendees who sign up on the day.)<\/p>\n Other tactics can be claims of strong capital growth rates that may not be independent or credible, or pandering to those who haven\u2019t got sufficient funds with claims of \u201cno money down\u201d.<\/p>\n Similarly, those who bought from property or project marketers who were working for the developer often lost out because the advice they received was far from independent.<\/p>\n Successful investors build a great team<\/a> around them.\u00a0 They realise they don\u2019t have to be an expert in every field if they develop a good network. In fact, they know that if they\u2019re the smartest person in their team they\u2019re in trouble.<\/p>\n This network includes a good finance broker, a smart solicitor, a property savvy accountant and a knowledgeable property strategist such a Metropole Property Strategists.<\/a><\/p>\n There you have it\u2026.11 common complaints that I\u2019ve heard from property investors.<\/p>\n I guess that\u2019s why I often say property investment is simple \u2013 but it\u2019s not easy.<\/p>\n Clearly, many property investors fail to achieve the financial freedom they desire so the answer is not to do what the majority of property investors do, and instead invest strategically like that small group of successful investors do.<\/p>\n True wealth through property is built in stages, as I see it these are:\u00a0<\/strong><\/p>\n ALSO READ: <\/strong><\/span>I would have been a better property investor if I knew these 12 things earlier in life<\/a><\/p>\n
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1. I\u2019ve made a poor property selection
<\/strong><\/span><\/h2>\n![\"Poor](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2015\/08\/location-map-house-suburb-area-find-300x225.jpg\" "\\"Poor")
<\/p>\n2. I\u2019m not handling my money correctly \u2013 Poor cash flow management<\/span><\/h2>\n
3. I bought my property in the wrong ownership structure
![\"Businessman](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2015\/09\/bank-lend-meeting-advice-help-work-couple-300x205.jpg\")
<\/span><\/h2>\n4. I\u2019m running out of time<\/span><\/h2>\n
![\"property](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2016\/09\/24834990_l-225x300.jpg\")
<\/h2>\n5. I\u2019ve missed the boat<\/span><\/h2>\n
![\"property](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2016\/09\/17034015_l-300x200.jpg\")
<\/strong><\/p>\n6. I\u2019ve got off-the-plan woe<\/span><\/h2>\n
![\"offplan\"](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2014\/08\/offplan-300x200.jpg\")
<\/p>\n7. Unfortunately I believed the hype<\/span><\/h2>\n
![\"location](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2015\/03\/25504740_s-300x298.jpg\")
<\/p>\n8. I\u2019ve got depreciation confusion<\/span><\/h2>\n
9. I\u2019ve got property management problems<\/span><\/h2>\n
![\"Property](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2016\/06\/43009653_ml-300x200.jpg\" "\\"Property")
<\/h2>\n10. I got caught out by spruikers<\/span><\/h2>\n
11. I haven\u2019t built a great team around me
<\/strong><\/span><\/h2>\n![\"Failing](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2014\/08\/team.jpg\" "\\"Failing")
<\/p>\nSo what\u2019s the alternative?<\/span><\/h2>\n
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![\"True](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2016\/06\/45437255_l-284x300.jpg\" "\\"True")
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