When talking to the first-time investor, there are some misconceptions you need to deal with and many lessons to learn.

I’m trying to uncover the two most important concepts that prevent the average real estate owner from earning a fixed salary and building an uninterrupted life in their free time.

These are basic instructions that not everyone can immediately understand. If you really like it, you will ensure that you can follow your path, and even if you invest in a real estate challenge, you can give up, reduce your losses and throw them away.

These are facets that help you “remember to breathe” (more on this later).

Lesson 1: Get rich slowly

Talk to a group of lucky buyers who were able to acquire quality stock in Sydney between 2009 and 2012.

Currently, those percentages are experienced souls who have been in the game for some time. Looking at the ups and downs and sides of the market, they realized that a rapid burst of capital growth could be followed by long-term strong performance.

Unfortunately, there will be many other people in the cross-examined crowd who were first in this growing season. They praise your “smart strategic approach” and congratulate you on your excellent research skills. These are usually the first or second homeowners who intervened at the right time, and the value of their property increased by 50-70% in a short period of time. This team is sorry because their spirit is rooted in the view that making money in real estate is easy and fast.

The recent increase in value of our largest capital has been extraordinarily beneficial, but for a moment I don’t believe this is the norm. If you buy early, double-digit annual growth is great, but long-term investments can make a lot of money.

I’ve heard that some inexperienced investors have adopted the “buy, refinance, buy, refinance, buy, refinance …” mantra with little consideration of financial resilience, market, and cycle phases. I am. The market is changing (as you’re definitely aware), and for those who are so financially wide that they can’t keep climbing this one-way ladder, there’s only one way down when the stairs are exhausted. , You will find it difficult and fast.

In my experience, you must own real estate for at least 10 years before you can grow from the listed values ​​… and that’s a minimum.

Look at Brisbane. It is a market with very good principles, including not only economic and population growth, but also affordability and lifestyle. Since 2008, Brisbane real estate has had one of the least impressive performances of a decade to remember. During this time, it wasn’t as profitable as Sydney or Melbourne, so some might speculate to buy it within five years.

Brisbane has experienced an average price increase of nearly 40%, despite a decade of lack of market awareness. This may not sound unusual, but it was a time when the floods struck and the aftermath of the post-mining boom was affecting real estate prices.

Despite the problems, the Brisbane investors who have been waiting are still far ahead … and above all, the fundamentals look good for years to come.

Lesson 2: Complex wealth

This is arguably one of the most important economic lessons new investors can add to their learning quiver.

Combined growth has incredible financial results. There are two things to keep in mind here.

First, by owning real estate over the long term, we are effectively reinvesting capital to create more value. Let’s use a simple and very conservative example.

Buying real estate for $ 500,000 today in a region that is growing at a very modest average of 5% per year will not make $ 25,000 a year in the next 10 years. We are aware that compound interest growth will roll $ 25,000 from the first year, so we have assets worth $ 525,000, which will grow another 5% in the second year.

You now own $ 551,240 worth of assets, up 5% again. Do you know where we are going here? I did a 10-year figure for you. If you invest $ 500,000 a year and make only $ 25,000 a year, your share at the end of the decade is worth $ 750,000. However, if you allow the “rollover” value for the compound, the same number indicates that the asset is worth $ 814,447. This is a composite bond of nearly $ 65,000 in a market where performance is declining due to too low performance.

The second element of compound interest growth is even better because it has more properties and motivates you to be more strategic in your purchases. If you have a portfolio worth $ 3 million and have capital that follows the same conservative rules as above, it is worth $ 4,886,684 in 10 years and your profit is about $ 1.9 million. This is a very useful change.

Now imagine that these properties are between two or three of these cycles. The potential benefits are amazing. Well-informed and highly diversified investors may not only be limited to one location but may also make purchases at the right stage of the cycle by searching across the country.

While we recognize that there are variables and nuances in real life that need to be addressed, it is important to recognize why long-term strategic investments have extraordinary consequences in this exercise. Why are these lessons so important?

With this knowledge in mind, smart investors know how to look at their portfolio in the long run, especially if it looks bad. As I mean … don’t forget to breathe!

If you hit the road, pull it down, reorganize your mind and focus on a long game strategy. He’s not short-term with this, but he’ll enjoy the results in the coming decades.

The market is rising slowly and growth is deteriorating. If you stay on the course, you will remember the decision to stay in the game as one of the wisest moves in your life.

Visit Equimax Property Group or call us at 1300 943 232 to get expert advice on property investment.