A Property Millionaire? It Starts With A Small Step…

I’ve never been a great fan of dinner party property talk. You’ll understand that for me it’s an occupational hazard, and one that I now usually try to avoid at all costs. In the early days, when I was asked what I did for a living, a truthful answer would inevitably lead to time spent having to listen to how well house prices were doing in such a such an area, and comments like ‘how I wish I’d bought three’ and questions such as ‘what do you really think about buying in France because my brother/sister has just bought there, and I don’t know if they are mad or genius?’

Then, of course, there’s the million dollar question: ‘what do you think I should be buying and where?’

Now, when I’m asked about my day job, I usually just mumble something like ‘this and that’ and hope the subject is quickly dropped, unless, of course, I am talking to a fellow ‘pro’.

That’s a different kettle of fish altogether – and while the downside of my position is the risk of having to listen to banal and ignorant witterings, the positive flipside is the opportunity to meet and pick the brains of many uber-successful property types. Then (when and if appropriate), I can choose my time to drop in the ‘what do you think I should be buying and where?’ question.

One question I probably get asked more than any other is ‘Do you really think that anyone can become a property millionaire?’ To the surprise of whoever is asking, the answer is always yes. What these people don’t appreciate is that I’m not saying that everyone will become a property millionaire, just that anyone can become a property millionaire.

The reason why I’m absolutely convinced that anyone can become a property millionaire is because I think anyone can. That might sound obvious, but it’s worth stressing because sometimes I think people assume it’s a trick answer.

I don’t think you need special skills or talent and actually I think motivation and persistence are more important than being clever. No disrespect to the above-mentioned uber-successful, but I think many of them are good examples of the value of persistence over IQ.

That said, of course it can’t all be about persistence, there’s absolutely no point in persistently doing completely the wrong thing. So we need to know what we are doing.

A Little Knowledge Is A Good Thing!

Thankfully, in this day and age, ignorance is not an excuse. There’s so much information available, especially on the internet, and a lot of it for free. Having said that, the wealth of freely available information can be a problem if potential investors know so much that they feel overwhelmed and don’t know where to start. Information overload can mean doing nothing instead.

An antidote to this is to keep things simple. It’s probably better to take a little knowledge and to apply it well, than to try to use a lot of knowledge and to apply it badly. In a similar vein, experts on success tell us that a simple plan executed well (my emphasis) is better than a complex plan executed badly or, more obviously, not executed at all.

So, if you want to become a property millionaire, do something simple – but do make sure you do something.

I’ve said for a long time that the ultimate lazy man’s way to property riches is to buy a property and then wait. I honestly believe that most people, if not everyone, are capable of doing that.

The one thing I’m not predicting is how long it will take you to become a millionaire by this method. It seems the property market is set for a period of volatility, and average growth rates may well struggle for a few years. But despite all of that I still believe that long-term property prices are still only going to go one way – upwards.

In a sense we always stand at a pivotal point in our lives because at any time we can decide to do things differently or – in the context of what we are thinking about – do something.

A decent life coach will tell you that major life changes start with small changes implemented consistently. In other words, if we want to see massive results in our life, we don’t need to do big spectacular things. It’s when we do the small things that we know we should do and could do, but don’t do – that (when we do them well) we start to see the changes that we desire.

That’s why the more ambitious or aggressive investors don’t just sit back and adopt a passive approach. They recognise that if they can buy one property then, in time, they can buy several. And they recognise that if they can buy several then, in time, they can buy many.

This is something many new property investors have difficulty in understanding. To be more accurate, it’s probably those who would like to be property investors but feel daunted by the prospect of taking action, that have difficulty understanding this – and as a consequence end up doing nothing.

The Salami Principle

Keeping our eyes fixed on the goal is one thing, but to achieve big things we need to slice the big things into small tasks. Then, as we do each task sequentially and to the best of our ability, before we know it we’ve achieved the overall aim.

In some management books this used to be called the salami principle. No doubt someone has coined a more exciting and up-to-date buzzword, but the principle is still relevant.

None of this is rocket science, none of this is new. If we thought about it we’d all realise that we can make choices, that most of us have power over our decision-making process. Yet sadly few of us choose to do the simple things that will make a major difference.

So why is that? The truth is that human behaviour is fairly predictable. Most of us are intrinsically lazy and would rather do the easy thing – and in many instances, the easy thing is to do nothing. Confronted with the reality of having to take responsibility for their actions and to get out there and do something, many people just shrug their shoulders and continue their lives of wishful thinking. For your sake, I urge you not to fall into this trap. At a time of such amazing opportunity, it must be worthwhile giving it your best shot. Nobody else can do it for you. Nobody else can take risks for you. There’s only one person who can take responsibility for your life, and your actions, and the decisions that you take. And that’s you.

Getting Started

So what are the small things that we should be planning into our lives if we want to be successful in property?

First, having taken on board the point that we don’t want to suffer from information overload, we should be scheduling in learning time and education.

However, all of this will mean nothing unless, at some stage, you are prepared to ‘jump’ and take the ultimate of actions: buy a property. After all, isn’t that what it’s all about?

Over the last year or so, many readers of Property Auction News have written to me asking whether, because of the vagaries of the market, it might not be better to wait until ‘things improve’.

What improvement are they waiting for, I ask? Improve from whose point of view? Although it seems countercultural, there can surely be no better time to buy property than when it is at its lowest available price and when the next likely move in price is up. If we wait for the property market to recover, surely it can only be improving from the seller’s point of view. Though there are certainly ‘vagaries’ in the market, things have surely ‘improved’ already from a buyer’s point of view, haven’t they?

Ah, they usually retort, when you aren’t sure which way prices are going to go, buying property is surely a risky business?
However, people who have been reading Property Auction News long enough know that we don’t rely on market movements to make money in property, so this is something of a non-question. Actually, without wanting to sound harsh, it’s actually a bit of an ignorant question and emphasises yet again the need for education – specifically how to succeed in property in a static or falling market.

My view is that it is far riskier to do nothing than to do something. If you do nothing, there can only be one result – nothing. If you do something, there is always the chance of a successful outcome. True, that’s not necessarily guaranteed but I’m not suggesting recklessness, just action. Before we take any action we weigh the risks and the probability of any particular outcome. We might not be able to guarantee a particular result but if that is the most likely outcome, we can decide whether the possibility of achieving that outcome makes taking any risk involved worthwhile.

How Risky Is Too Risky?

Of course, we all have different views on what constitutes a risk. Just think of this. Of those who write to me saying ‘it’s too risky to invest in property at the moment,’ I’d guess that most would be happy to leave their money in the bank, ‘risk free’. Ignoring the lessons of recent history – that banks can fail like any other institution and that any apparent security is illusory – if you leave your money in the bank you are likely to receive only a minuscule amount of interest. This can literally be as low as 0.1% but even with a decent amount deposited, you’d probably only get 0.5% to 1%, unless there are strings attached – make sure you read the small print.

Whilst you are receiving next to nothing in interest, the official rate of inflation is bouncing around in excess of 4.5%. However, some would argue that the unofficial rate of interest is nearer 5% to 6%. So every day your money sits in the bank it is not just being eaten up by inflation but, in real terms, it is being devoured alive.

When you look at the likely outcome of investing in property or a deposit account you can see that the real risk is putting your money on deposit, but most people have been conditioned in their thinking not to see it that way.

Most of us are risk averse to some extent, but I am convinced that to be successful in property we need to push the boundaries of our comfort zone and accommodate more risk than perhaps, at the moment, we would want to. For example, most of us will be wary about taking on debt, which – unless you are cash rich – will be an inevitable consequence of buying a property.

Learning to tolerate more ‘risk’ isn’t an overnight process and in any case it wouldn’t be wise to jump from being extremely risk averse to bordering on the reckless. In fact I hope it goes without saying that by definition there is no place for recklessness in the activities of a property investor.

Investors need to be able to expand their risk tolerance by periodically taking on more risk and becoming comfortable with it. Then they repeat the process.

Which brings me back to my original point: is the next year going to be when you buy a property? Or, if you already own property, buy more property? If we believe that success is the accumulation of doing a simple thing well and then repeating the process, isn’t this something we should all consider doing?

I don’t know about you but my guess would be that with just a few weeks to go before a brand new year, the unsuccessful masses have already given up on their dreams and have already reverted back to the way they always do things.

You and I don’t have to do that. We have choices and can choose to make them.

So let’s make some good ones!

Peter Parfait – Property Auction News Editor

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