I’ve got several books on the boil right now; reading different ideas about property investing and finding out there’s some wide varying advice.
So, why all the variation? Why does one guy say “Do this!” and the next guy says “Don’t do it!”? What’s the underlying reason? Is it because one guy is more of an expert than the other? Is it because one guy knows what he’s talking about and the other doesn’t? Is one guy just flat out lying? Are they both wrong?
I’ve found – sometimes through painful experience – the reason is simple; the person giving the advice has a bias. And, the bias is money. This is generally the case with any salesperson. So, you and I as property investors should be looking for the bias and take it into consideration when making investment decisions.
Captial Gains?
For instance, I read one person saying you only invest for capital gains. That’s the sole purpose for property investing. Why capital gains? Because that’s where you get your growth. That’s where you get the equity to make your next purchase. That’s how you grow your wealth. If your property doesn’t increase in value, then you won’t be able to move forward with your investment plan.
Cash Flow?
Another advises … only invest in cash flow positive properties. The property must make money from day one. No exceptions.Mix?
Mix?
Finally, another person tells me to invest in both capital growth and cash flow positive properties. Have a mix.
Can they all be right? If not, who’s right? Who do you believe?
Follow the money
Could it be the person recommending only capital growth properties is selling these type of properties? Could it be the cash flow guy only has these type on his sales sheet? Could it be the “mix” person is selling every type of property?
Do these people have your best interests in mind? Do these people really know anything about property investing or are they just experts in sales?
When a person has something to sell you, they probably have a bias towards that product. There’s nothing wrong with that, but you and I as investors must take this bias into consideration. We have to be careful to verify everything we’re told to make sure we’re making investment decisions based on the facts, not on the sales person’s “biased” opinion.
Why not listen to those who have done it!
Hey, here’s an idea; when seeking property investment advice, why not look for and listen to successful property investors?
How is it that some property investors make money no matter what the overall market is doing? How do they manage? How do they know the future? Have they got some inside information? Are they clairvoyant? What makes them so successful?
I think you’ll find, there’s no secret. There’s no magic formula. There’s no secret potion.
I think what you’ll find is successful property investors are like successful people in all walks of life.
How so?
Successful property investors – like other successful people – are very good at what they do. Property investors are very good at property investing.
How did they get that way?
How does a plumber get good at plumbing?
By doing it; over and over again, for many years.
I’d recommend finding these people and listen to them.
Be careful who you listen to …
But, are the successful property investors the ones giving the advice; are they the ones offering their services?
Usually, they’re not. I think you’ll find most successful property investors are focused on one thing … investing in property.
Then who are these people doling out all this expert property advice?
If they’re not full time property investors, then what are they selling? If they’re selling something, then does that affect the advice; does it put a bias, spin or slant on what’s being said?
The answer is … YES IT DOES.
So, be careful who you listen to. Find out what this person is selling, then factor that into the advice given.
For instance, when a person says, “Don’t buy US property.” Challenge that advise by asking a few questions, like …
“Where should I buy then?”
“Oh, you should buy in Australia.” comes the reply.
“Why’s that?”
“Blah blah blah!” as you listen to the story.
“So, you have property in Australia for me to buy?”
“Oh yeah! Plenty. And it’s all good!” Comes the not too surprising reply.
“Have you got any property in the USA to sell me?”
“No.” Followed by a bunch more blah blah blah.
“So, let me get this straight … you recommend I buy property in Australia where you have properties to sell me, or you make a commission on the recommendation, but you have nothing to sell me in the USA. Have I got that right?”
“Well, yeah. But, even if I had stuff in the US, I wouldn’t recommend it.” Comes another unoriginal response.
“Ok. Thanks. See you later.” And, then you calmly walk away.
Follow the money; find the bias!
Isn’t it amazing how for some sales people, the best product ever is the one they’re selling. Then a week later you see the same person and the best product ever is something else; and it just happens to be – SURPRISE – the new product they’re selling!
“What about the blue board construction home you sold me?” You ask.
“Oh, that’s no where near as good as this new modular material imported from PNG and we can put it up in half the time of that blue board stuff.” Comes the disturbing reply.
“I thought you said the blue board was the best for the money?”
“No way. The new stuff is better and cheaper!” Comes the over the top response.
As I turn around and walk away, all I can think about is the over the top enthusiasm, and how it reminds me of something. It reminds me of how this same guy sounded when he was selling me the blue board construction.
Follow the money; find the bias.
It’s there. For us property investors, it our job – our duty – to find it. Find the bias, the twist, the spin, the slant, the underlying motive.
Do you have your own story about “biased” advice …