Stay the Course in Real Estate Investing

By Michaela Ryane for the Australian Property Investor magazine May 2007 issue. Not many of us are turned on by the idea of ‘getting rich slow’. But patience does pay off on the winding road that is property real estate investment.

Remember Veruca Salt, a.k.a. the girl who screeched: “I want an Oompa Loompa now!” in Charlie and the Chocolate Factory? Well, if we’re really honest, a lot of us have some Veruca in us – we crave for instant gratification.

Occasionally, property real estate investors get rich quick. But for most of us, it’s a case of sitting back for a while before the gains become obvious. In the meantime your inner Veruca might become impatient. She may even urge you to sell up. So how can you get out of the Veruca mindset and into the mindset of ‘staying the course’?

1. Consider historical data

If you’re influenced by short-term events, you’ll make yourself unnecessarily anxious. Historical data confirms that real estate property values and rents have always gone up in the past. Best selling property author Jan Somers has been investing in real estate since the seventies. She uses historical data to build her confidence. However, she cautions: “You shouldn’t rely on those statistics to decide when or where to invest.”

2. Take a long-term view

If you buy real estate property expecting strong short-term gains, there’s a reasonable chance you’ll be disappointed. With a long-term view there’s a much lower chance of disappointment. “Long term is more than four or five years,” Somers suggests. “I can’t tell you the number of people who in the late 1990s and early 2000s had held on to property for four or five or seven years and said, ‘look nothing’s happening and we’re going to bail out’. And they’ve bailed out and missed out (on significant gains).”

3. Remember why you’re doing it

Goal setting 101: if you set a goal, write down the reasons why you want to achieve the goal. If you didn’t do this when you started investing in real estate, do it now. This is your big picture – your motivation to stay the course. You can refer to it whenever you start to get impatient. You may be forced to make some sacrifices when you start investing in property and real estate investments, but if your big picture excites you, you’ll be more willing to do whatever it takes to achieve it.

4. Know your risk profile

If you’re prone to anxious worrying, look for ways to increase your ‘sleep-at-night’ factor. You can fix rates, hire property managers, get landlord’s insurance. Whatever it takes for you to stay the course.