Property Investment for Millennials: Strategies Tailored to the Young Investor
As an educator in the property investment industry, I’ve had plenty of time to sit and chat with so many like-minded investors.
And whether it’s tales of success or stories of failure, whether it’s from the experienced investor or the newcomer, there is always a lesson to be learned.
So in my years as an educator and property investment strategist, it’s fair to say I’ve gained plenty of insight.
What defines success in the eyes of an investor? How do they achieve that success?
Of course, success is relative. It’s largely going to depend on your resources and goals as an investor.
That being said, there are some key indicators, real estate investment strategies, and lessons that generally point towards success.
Let’s have a look at some of these lessons that have been learnt by Australian investors over the years.
1. Discern fact from fiction
When starting out as an investor, you’ll be overwhelmed with information from a variety of different sources.
It will probably start to seem like everyone is an expert when it comes to investing.
It’ll be up to you to determine what is fact and what is fiction; what is opinion and conjecture, versus legitimate strategies backed up by data.
Let’s take a look at an example: Perth
Uneducated professionals (buyers agents) & investors keep saying that Perth property only rises when there’s a mining boom.
“High risk, High risk” they quack like lost ducks out of their pond. But mining capital expenditure has barely risen in years!
Yet many Perth suburbs have risen over 50% in less than two years!
It’s important to understand that Perth is not just a mining town. Perth is just as susceptible to the ups and downs of the resource sector as other cities.
Clued-in folks will know mining jobs are created when mine expansions occur (as opposed to increased ongoing production).
Mining is an incredibly capital-intensive industry these days – not so much labour intensive. Moreover, iron ore prices have dropped 50% for more than a year yet Perth property prices keep rising!
But it was the loudest voices and opinions in 2020/2021 claiming that Perth was not worth your time.
Because of this, several high-profile buyers agents who quack “Data, data” have missed out on the best growth suburbs across Australia due to well-intentioned ignorance.
PS, if you think you’ve missed out on the Perth wave, think again. Check out this video here for further insight:
Lesson: don’t assume something is true just because the biased content you consume tells you so
2. Start early if you can
Most successful property investors will encourage others to start investing while they’re young.
Even those who started later in life and have had plenty of success as an investor will still say they regret not doing it sooner.
The longer you spend in the property market, the more time you’ll have to build long-term goals.
Over time, you can buy multiple properties, diversify your portfolio and build your financial wealth.
Many young people considering investing may be intimidated by the investment process and the risk factor, especially if resources are limited.
This is why it’s so important to get educated early and engage with all the learning material ASAP!
And if time is a factor, it’s a great idea to consider property investment courses.
There are plenty of great real estate investment courses in Australia that can fast track the learning process.
Lesson: don’t let youth and inexperience be a barrier to investing – start educating yourself early!
3. Don’t be discouraged by interest-rates
There are still plenty of investors who have found success when interest rates rise.
History suggests that interest rates don’t necessarily have a direct impact on housing prices over the long-term.
There have been plenty of times where interest rates have risen or stayed flat and house prices have dropped (i.e. 2003-2004, and again in 2017-2018), or even where interest rates have risen and house prices have gone up (i.e. 1994).
While more often than not, rising interest rates do equal falling house prices, these are often just minor corrections in the market.
The most successful property investors won’t see rising interest rates as a deterrent and look for pockets or suburbs that will continue to rise.
Success has come from persevering through these periods of high interest and focusing on the markets within markets.
Lesson: Don’t let the media scare you into not buying as a result of interest-rates. Don’t focus on whether now is the right time to buy, but instead focus on where to buy.
4. Know what you want to achieve
Any property investor worth their salt will say that they started out with a plan.
They knew what they wanted to achieve as an investor, how they were going to do it, what obstacles were in their way, and how to overcome them.
Sure, this plan can change over time, but it’s important to know your goals and limitations from the start.
Having a comprehensive understanding of these goals can take some time, but it’s time well spent.
Research and education also comes into play here.
Take the time to learn about what’s possible and how it can be done. Learn from the success and failings of others.
Lesson: Take the time to understand what you want to get out of investing, which will help guide your strategy as an investor, increasing your chance of success.
5. Take the plunge!
All successful investors will look back at the start of their journey and thank their younger selves for diving headfirst into the property investing world.
And while that may be easy to say in hindsight, there’s no reward without risk.
There will always be a reason not to invest. It’s about overcoming that fear through preparation and education, but also having the courage to take the plunge with that first purchase.
These lessons have all come from property investors who were once novices and had to overcome all the noise and naysayers.
But the financial happiness they’ve achieved by taking that first step speaks for itself.
Final Lesson: Don’t fear the unknown. Mitigate risk through education and stop sitting on the edge of the fence!