16 Feb Golden Rules of Property Investment
In today’s show we hear about the good property investment principals – some golden rules – from Sky TV’s Chris Gray – star of ‘Your Property Empire’.
Kevin: I’m just catching up now with Chris Gray from Empire, YourEmpire.com.au.
Good day, Chris.
Chris: Hi there. How are you doing?
Kevin: Good, mate. Good to be talking to you again. I wanted to talk to you, Chris. I’ve noticed a lot of your blogs, and I’ve been watching you on Sky TV too. I thought it might be good to pick up on some of the good property investment principals that I know you follow.
One that’s near and dear to my heart is “don’t buy from your heart.”
Chris: Exactly. I used to be an accountant. Technically, I still am. There are not many great advantages to being an accountant, but one of the best ones I say is the easy way for a lot of property investors who are accountants to invest is we have no emotion so it’s very easy to make decisions based on the facts rather than the emotions.
Kevin: Yes. Use your head rather than your heart.
Chris: Exactly. It’s hard because properties look beautiful. We look down the street, and a lot of the time, we want to be able to live in them ourselves. But that doesn’t necessarily make financial sense.
Kevin: How important is it for someone to develop or understand their own risk profile when they’re developing a plan, Chris?
Chris: It’s really important, because there are a lot of companies out there and a lot of people that say, “You have to do this strategy; this is the only way.” There’s no way it can be right, because some people earn $50,000, some people earn $500; some people are 18, some people are 85. There is no way that there can be one strategy that suits everyone based on their income, their risk profiles, their family situations, and what they’re going through emotionally or work-wise.
Your strategy may well change over the decades, as well, so you really have to look at the pros and cons of every strategy. There are financial pros and cons, and there are emotional ones, as well. Then you have got to develop what’s right for you at that point in time.
Kevin: Yes. Timing the market: I know quite a few people talk about this but I’ve heard you say, too, that’s nowhere near as important as time in the market.
Chris: Exactly. We just look at the stock exchange, and if you try and pick the peaks and the troughs, you have absolutely no hope. I speak to the great guys at places like Reserve X, SQM Research, or AccuData, and those guys spend their whole lives studying the market and even they don’t profess to be able to do it inside-out and with any kind of guarantee.
The best thing I did is started investing at 22, and no matter what price I would have paid, almost no matter what property I would have bought – within reason – I would have made money on 20 years later.
Sure, it is important to get the right property. Sure, it’s important to get it at the right price, and a lot of people say you make your money when you buy. Sure, that is true, but the bottom line is if you’ve held something for 20 years rather than 10 years, chances are you’re going to make a lot more money.
Kevin: Have you ever been guilty of chasing hot spots at all, Chris?
Chris: No, generally I haven’t. I’m the kind of boring strategy, in a way. When the magazines say, “What are your tips for next year?” I’ll say, “It’s the same as last year. It’s the same as 10 years ago. It’s the same as 10 years’ time.”
My kind of investing strategy is go for a guarantee. I typically go for the blue chip inner city suburbs, without going for the CBD, because generally they’ve always been good, and I believe they’ll always be good in the future. The down side is it costs more money to get into them, the negative gearing is a bit more because the rent is less.
If you reckon you can take the next suburb that doubles from $200 to $400, good on you, but it’s unlikely to be the best suburb for the next 30 years. My strategy is to buy the property, always buy a good one, then sit on the beach, and I’m happy until next year comes around or even the year after until it’s grown, and then I just keep repeating.
Kevin: Always makes sense. Chris Gray, thank you so much for your time. Chris, of course, is a regular on Sky TV, and you can contact him through the website, YourEmpire.com.au.
Chris, thanks for your time, mate.
Chris: Thanks a lot. Cheers.