How to be a successful property investor

Simon Pressley says a smart property investor will focus on future indicators of growth and learn from their experiences.

Simon is a property market analyst, a buyer’s agent and an accredited property advisor who has helped many people make the right property investment decisions.

He told Bushy Martin on the Get Invested podcast that property investment is a continuous learning cycle – learning from your past experiences, researching the property market, and learning who you can trust with providing reputable information and opinions.

Simon said it starts with being honest with yourself and reflecting on your decisions in order to learn from your mistakes and ‘pain’.

“When you physically sit yourself down and force yourself to reflect back on that initial decision – and you’re honest with yourself and say ‘I relied on these things but with the benefit of hindsight, I now realise these things are more important’ – what that does is it sharpens your focus for decisions in the future,” he said.

“You see a set of circumstances in front of you. And because you’ve taken the time beforehand to reflect, you’re able to look at it and go ‘well if I head down this path based on past reflection, that’s probably going to be to an outcome that I’m going to be happy with’. Or conversely, you go ‘no, I know what that horizon looks like, I’ve been there before and I’m not going there again’.”

Simon said part of the decision-making process comes down to understanding what elements to look at when determining property market performance. And that doesn’t necessarily mean following what ‘everyone else says’.

The MD of Propertyology and three-time Australian Buyer’s Agent of the Year knows firsthand the importance of investing in accurate research and analysis, even if it goes against popular opinion.

“I used to think, like everybody else, that population growth was the most important thing for property market performance … and then you make decisions based on that and it doesn’t unfold the way you want,” Simon said.

“The thing that we put more value on in terms of research is the future direction of an economy of an individual town or city … more often than not, the trajectory that a town or city’s economy follows is usually the precursor for how its property market performs.”

He said other important indicators for property investors to focus on are jobs and supply in a location.

“The most valuable information is actually not in numbers. It’s in all sorts of written reports that give some insights into where the jobs are to be created or to be lost,” Simon said.

“On the supply side, the leading indicator there is building approval volume and understanding what happens in the construction industry because they are the ones who control supply.

“It’s understanding that what puts pressure on property prices is rising demand, and that rising demand is not population growth. The rising demand is rising consumer confidence caused by an improving local economy. But when you’ve got rising demand and you don’t have a lot of supply coming on board, that’s when you get pressure on property prices.”

With all these factors in mind, Simon said the most important thing for a property investor is ‘getting the individual town or city right’ and using a top-down approach with your decisions.

“Think of the decision as a property investor as one big search engine … we’ve got 10.3 million residential dwellings across this big country of ours. Our search engine is broken up into eight states and territories. And then within each state and territory … there’ll be a capital city and a big bunch of individual regions there,” Simon explained.

“We’re progressively going through, eliminating more and more to get a small cluster of locations that are left, and then getting into the nitty gritty of the local economy and the supply side of things. With that smaller class of locations, recommending one of those individual locations and then getting very street specific and property specific to find an individual property, that’s a forensic top down approach.”

He also talked about the need for property investors to avoid becoming emotionally involved and look beyond their own neighbourhood. Simon also believes that regional areas can hold a wealth of opportunities.

“Most property investors really do get caught up in their own neighbourhood and where they live and what a property looks like … so whether you’re starting out in your investment journey or you’ve bought several properties before, accept that appearances don’t make things grow,” he said.

“For a property investor, you’re not investing in bricks and mortar. The key to making good property investment decisions is to see property as a financial instrument. You’re investing in shelter. You’re not investing in something you’re going to live in.

“As soon as the mind starts looking at pretty pictures or going to open homes, you’re drawn into the emotion of the property. And the last thing you want to do as an investor is to be making emotionally driven decisions when you want a financial outcome.”

Listen to the full interview here.

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