With the Spring Racing Carnival Fever hitting most cities around Australia I am reminded of the old saying “you can’t keep flogging a dead horse”! Now this also reminded me of a lengthy discussion with a group of very experienced investors I was coaching one evening last week.
The discussion revolved around successful strategies for property investing in the current market. I found it an interesting conversation as I observed how adaptable some approaches to investing seemed to be, while other approaches seemed locked into what I’d called “fixed ideas”.
At Investors Direct we have the benefit of having dealt with many active property investors over the past decade or more. During this time we have seen at lot of different investing strategies successfully executed at different times. This means we have a much broader view of different possible strategies than most individuals who may have only employed one or two strategies themselves and not necessarily been successful at it.
In the discussion there was a particular investor talking about how he had been hugely successful with his particular investment strategy in the past but had been really struggling to repeat his wins over the past 3-4 years.
When I started to dig deeper into how, why and what he was actually doing to be getting such different results I became aware of the real cause. This investor was so certain that his strategy was “right” that he had been unwilling to change anything. He believed that all his poor outcomes were purely to do with the market and that if he kept doing the same thing the market would come back and return to his expected results. Now you have probably heard the saying ” the definition of insanity is to keep doing the same thing over and over again and expect a different result.”
So to assist him, we looked at all the criteria he was using to select his opportunities and make sure that he wasn’t missing something or had unwittingly broken his formula. The fundamental qualifiers he looked for were the typically tried and tested criteria.
- Location and distance to the inner city
- Suburb’s Historical growth rate performance
- Distance to transport
- Land size and development opportunity
In themselves there is absolutely nothing wrong with searching out these things but this particular client had done his research a long time ago and had identified some particular area/suburbs. It had now got to a point where he only looked within these known areas and kept executing the same process within that same market.
The poor results he was currently achieving were in my mind a reflection of two things:
- He “knew” too much to at anytime actually start questioning the assumptions and processes that he followed. (i.e. He hadn’t brought his strategy up to date with the current market.)
- He had a stubborn blindness to the fact that the current drivers in today’s market were very different to those in place when he originally created his strategy that brought him success.(He was stuck in “having to be right” to the point where he couldn’t question his own process which was eliminating any chance to modify and advance it!)
This particular investor was sitting on his previously winning horse and whipping away at it, without getting anywhere. He hadn’t realised that that particular race had ended, his horse had died and it was now a whole new Spring Carnival featuring a whole new bunch of races and horses.
Please don’t let yourself fall into the same trap of being closed to new trends. By refreshing your understanding of old trends and being open to the fact that there are completely different drivers in the market today than we saw in the 1990’s and 2000’s will ensure you won’t be stuck flogging your dead horse.
Get yourself up to date by coming to our next Investors Direct Wealth Acceleration Workshop where we look at the changes in strategy needed to accelerate you towards your financial freedom and what will be driving the next major wave of property demand. Book Here
In the meantime, Happy Investing!