The Price Of Listening To Poor Opinions

Ten years ago, when b Invested founder Nathan Birch was giving seminars on the success he had experienced from investing in affordable suburbs on city fringes, he noticed a lot of the attendees turning up their noses at some of the locations he mentioned.

These people had already formed their opinions on the suburbs in question, and they were not positive opinions. They went along the lines of:

“Those places will never rise in value”, or “you’ll get a bad tenant that will wreck your property” or “that suburb is a dump, no one will want to live there”.

The old saying goes that “opinions are like arseholes…everyone’s got one”. And that is true, but fast forward 10 years and those opinions cost those people a lot of money.

Coming from a low base

Houses in some of those suburbs, back in 2011, could be bought for $150,000. They were earning $200 to $300 a week rent and were therefore positively geared.

In 2021, those same houses are worth $700,000 plus. In the last 10 years, we’ve had 1 whole growth cycle and are in the middle of a 2nd one.

A total investment of $1 million in 2011 in multiple properties in those areas would now be worth six or seven times that amount, (depending on where you invested and which properties of course).

Some of the naysayers at Nathan’s seminar could far better off by now if it wasn’t for their preconceived ideas. Essentially, for them, the price of a poor opinion was significant.

Lost opportunities

There have been so many opportunities wasted for people over the years. Most of the time these stem from an ingrained mindset that stops them taking the plunge when the time is right.

Often the poor opinions extend to those surrounding the would-be investor.

“Uncle Doug knows a bit about property and he reckons the market’s gonna crash”… or “My cousin had an investment property and the tenants turned out to be drug addicts who didn’t pay the rent and knocked holes in the walls.”

Granted, bad things can and do happen, but if you talk to someone whose entire career revolves around investing in property, they will tell you that not only are the really bad stories rare, but they are also insurable.

Tenant wrecks your property? Your landlord insurance will cover it. Market has a negative period? You hold your property for another cycle. Even better, you got it under value when you bought it so are guarded against minor corrections.

Who do you listen to?

If you were playing tennis and Roger Federer came along with some advice for your backhand, would you listen? Or would you shun his advice for a family member who “used to be a sub-district A-Grader” 30 years ago?

It’s an obvious answer. But when it comes to property investing, it’s just as black and white. Someone like Nathan Birch, with 220 properties in his portfolio, is far more qualified to help you get educated on investing than someone who has one investment property (or sometimes none).

But it’s too late isn’t it? Properties are too expensive

The fact of the matter is that it’s not too late, there are still opportunities out there.

You can still find properties for $100,000 or $200,000 that are tenanted and positively geared. Think about it, with interest rates this low, you might be paying 3% interest in an investment loan. That equals $3000 a year for a $100,000 property. That’s $60 a week you are paying on an interest only loan, against the $200 to $300 you may be getting in rent. You don’t have to be the smartest kid in the class to work out that you are making money in that scenario. Then, in 10 years’ time, you’re on the right side of history.

If you need help getting started on a strategy or just want more information, reach out to b Invested on 1300 367 925 or admin@binvested.com.au