7 Things I Wish I Knew When I Started Investing
May 19, 2017 has come and gone now. That was the 18th anniversary of the purchase of my very first investment property – a $44,000 ex-commission three-bedroom home in Ballarat, Victoria.
If you’ve read my best-selling book, From 0 to 130 Properties in 3.5 Years, then you’ll be familiar with the fun, games and heartache that led to finding and buying a real estate portfolio that delivered my financial freedom.
During a recent moment of reflection, I noted down these seven things that I wish I had known then, or that someone would have told me, before I began investing:
1. Invest (And Keep Investing) In Yourself
 It’s easy to become fixated on what you’re investing in (i.e. the product – the house, location, what it’s made from, etc.) and overlook the fact that the real asset isn’t what you’re buying, but rather it is you, and your ability to find, buy and manage the investment to make the most money, in the quickest time, for the least risk and lowest aggravation.
 The product isn’t the asset. You’re the asset!
 No one can reap where they haven’t sown, so before trying to buy the real estate sale of the century, first invest in acquiring the seed (i.e. the skills, tools and techniques) and learn how to sow it successfully.
2. Simple Is Better
 Wow – have I seen some fancy schemes for making money that you’d need a PhD to understand! Have you too? Such proposals are usually interesting and often promise easy riches, but, over time, I’ve found simple is always best.
 Right from the very start I’ve always asked this one simple question before purchasing a piece of real estate:
   “Will buying this property bring me closer to, or further away from, my investing goal?”
 If the answer is further away, then I won’t buy it.
3. Don’t Go It Alone
It might seem easier, and less complicated, but investing alone is not the best option.
Left alone, you can probably convince yourself that it’s a good idea to buy (or not buy) anything, no matter how hare-brained it might actually be.
Your personal bias can easily cloud your objectivity
and cause you to make a silly mistake.
Having a good team around you, that includes smart advisers and/or business partners, allows you to widen your available skill base and make better decisions. It also adds accountability.
If you’re the smartest investing mind on your team then you have a problem because you won’t ever be able to achieve more than your available time, money, skill or risk tolerance allows. Leveraging off the time and knowledge of others allows you to exceed your own limitations.
4. Once You Achieve One Goal, Make A New One
It’s embarrassing to admit, but I’ve sometimes completed a big goal and then gone weeks, sometimes even months, before making a new one. During the ‘in between goals time’ my efficiency drops, I’m far more easily distracted, and my motivation wanes.
If you don’t know where you’re going
it doesn’t matter what route you take to get there.
The self-discipline of making -> achieving -> making -> achieving, etc.. is one of the biggest differences between amateurs and professionals. Amateurs set goals when all else fails, professionals know that all else fails when you don’t set goals.
Anyone who wastes time doesn’t value it.
5. Ask For Help
It seems nuts now, but after my books were published, I stopped asking for help for fear that people would think I was stupid for not knowing the answers. There’s a word for that: pride.
I had to lose more than $150k in a dodgy investment before I realised that it’s wiser to risk being considered stupid for asking than it is to remain self-righteously and dangerously ignorant.
What’s stopping you from asking for the help you need to excel?
6. Seek To Be Consistently Challenged
One of my favourite sayings is:
As iron sharpens iron, so one person sharpens another (Proverbs 27:17).
During the good times, and the tough times, surround yourself with people who are courageous enough to challenge you, and supportive enough to prevent you from backsliding.
As the saying goes – it’s hard to fly like an eagle when you’re surrounded by turkeys. Eagles soar. Turkeys get eaten.
7. Investing Is A Journey, Not An Outcome
Managing your money and investing it wisely is not a one-time endeavour; it’s a lifetime pursuit.
The objectives you had yesterday will not be the same as those you will have tomorrow because your needs and wants will vary as you proceed through life.
Over the years, those you meet on your investing journey will come and go, and that’s okay. Enjoy the time you share together and look for ways to edify and encourage one another, for money comes and goes, but true friends and happy memories last a lifetime.
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What’s a saying or a piece of advice you wish you had known, or someone could have given you, when you started investing?
Post it as a comment below.
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Steve McKnight is the founder of PropertyInvesting.com.
Steve’s next live speaking event will be at the upcoming 3-day Millionaire Mega Conference in Sydney on 15, 16 & 17th September 2017.
Reserve your Millionaire Mega Conference tickets here.
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My late Dad once said, when I bought my first property just after my 21st Birthday (you had to be 21 to buy a house), “If you would not live in it how can you expect others to?” What he meant was if the house I bought at a good price was at that price because it was shabby or run down, how could I expect to sell it looking the same & make a profit?
I have always used that saying & if I buy a house to either do up & resell or rent out I always ensure the house looks like a home & is the best it can be (credit limits prevailing of course!) and in 40 years I have never had a tenant leave because the house was scruffy or not looked after.
Thanks for that tip John. Your dad sounds wise, as thinking about who might buy the property off you prior to you purchasing it is not in the mind of many purchasers.
– Steve
Thanks Steve. Great advice.
One that comes to mind from me is, don’t try to reinvent the wheel, find someone who knows how to make the wheel you want, learn from them, then make that wheel over and over. Then automate the process as much as reasonably and practically possible.
Well said Peter. Most people know about money leveraging – which is also known as using other people’s money, and time leverage – which is using other people’s time, but few people think about the benefits of knowledge leverage – which is using other people’s knowledge to avoid making mistakes and/or avoid unnecessary aggravation.
From time to time I’ll encounter people at seminars that would rather ‘save’ money and go it alone than invest in knowledge. That’s a false economy in my opinion, as while you will save your money, you forego time and knowledge leverage. I always like to say that the best investment anyone can make is in themselves. That is, acquiring the knowledge to fast track and then having the courage to apply it.
Cheers,
– Steve
We dealt with a company called (not so ) Positive Real Estate, who talked us out of buying in Sydney, and buying in Gladstone Qld instead, foolishly we trusted their advice, and as we all know values and rents have dropped half. Have you got any advice for us and others to keep away from these companies , whose only consideration is their bottom line
“No body loves your money more than you do”. I learnt that one after meeting a dodgy builder who gave very poor advice.
Oh Peter. I am sorry to hear what happened. I know you are not alone as others have approached me over the past few years with similar experiences.
One of the questions I’d ask is this: Would you buy the property again today (at its current market value) as an above-average growth and/or income investment? If the answer is no, then you need to think carefully about why you would continue to hold it.
If you can make it to Mega Conference this year then come and see me and we can talk more.
Bye,
– Steve
Leverage into growth or you remain a wage slave
Thanks David. ‘Wage slave’, eh? That about says it all.
Just remember that leverage is a double-edged sword in that it can cut, and the user can get cut.
I like to say there are two types of debt: bad and worse. I advocate that people should get into debt only if they also have a plan for getting out of debt too. That is, debt should be seen as a temporary necessity, not a life long marriage. Life is a lot less stressful when you don’t owe anyone anything.
– Steve
A wise man once said “Don’t expect your first deal to be your best deal”
It taught me to go do a deal! From that I learnt two things
1. Would I do my first deal today – probably not
2. I’d never know that without having done the first deal
Hi Adam,
Great tip! Thanks for making it.
Perfect deals are like mermaids… if they exist I am yet to see one.
Instead, my experience tells me that great deals are made, not bought.
I’m looking forward to seeing you at Mega Conference in Sydney in September.
Oh, and I’m proud of how far you’ve come! Well done.
– Steve
Hey Steve
18 years ago – wow where has the time gone!
I remember the day well and our nervousness and excitement on the drive back to Melbourne.
Certainly didn’t expect that little purchase would have lead us both to where we are today.
So thanks for sharing and allowing me to reminisce!
Dave Bradley
PS And the lessons are as useful today as they were 18 years ago!
Hi Dave,
Good to see you taking a walk down memory lane !! That was quite some journey that you and Steve embarked upon.
Hope all is good with you,
Regards,
Benny
(Les Benbrook)
Hi Dave,
It is nice to see a comment from you.
Steve definitely has mentioned a lot about the journey together with you in his book.
I wish you both all the very best as you deserve.
Steve – Thank you so much for all the advice that you provide to your followers.
Thank you
G’day Daveo,
Thanks for making a post. It’s great to see you online.
Yes, hasn’t it been an adventure?! Many highs, the occasional low, but come what may, it sure beat doing time sheets. That said, I do miss the games of office cricket with the umbrella as a bat. Those Venetian curtains were never the same.
Looking forward to catching up soon after I get back to Australia.
– Steve
Buy problem, sell solution.
Just remember too AA that the value of the solution must exceed the cost and fix.
– Steve
I’d rather own the worst house in the best suburb, not the other way around.
Thanks again AA.
Home owners buy with their hearts. Amateur investors buy with their eyes. Savvy investors buy with their heads.
– Steve
Hey Steve,
Great advice, any ideas on good areas that provide cashflow atm? Or if you were to advice a person with a Small portfolio on where to look for decent yield/cashflow where should I look.
Love the books and info,
Cheers
G’day Tim,
Remember that every rental property is positive cash flow with no debt. So, if you want to buy positive cash flow property, dial back the debt to a level that keeps the interest low enough to get that outcome.
Sadly, the days of buying positive cash flow property with a 80%+ loan in Australia have gone much the way of the dinosaur – well, at least until there is a property correction, but that will throw up other problems.
You ask for some tips though, so here are three:
1. Consider commercial property where the tenant pays the outgoings. That will mean your gross rental income is close to your net rental income.
2. Search in regional areas. Typically regional areas have higher yields.
3. Get creative. Consider renting by the room, holiday rentals, etc. to try and get more rental juice from the property orange.
– Steve
Always research before investing. Don’t just jump in and hope for the best.
Well said Robert.
It’s wise to learn to swim before you jump in the investing surf.
– Steve
What do you do when you are holding two properties in an area where values and rents have fallen considerably ? We are just trying to wait it out but it stops investing in its tracks when they gobble up any spare income as the rents are much lower too. 😕
Hi Kerrie,
As I mentioned earlier, if you wouldn’t consider buying in the area again at current market values, you have to consider the merits of holding.
That said, could you halve your risk by selling one and keeping the other? Or is it all or nothing?
If you can, book in for Mega Conference as I will be running a workshop on this topic (deal evaluation).
– Steve
During the Property Apprenticeship Steve once said “There’s no such thing as the perfect deal”. That freed me up to find good deals which were more plentiful than the perfect ones. Thanks
Thanks Annp.
There is no such thing as the perfect deal but some deals are more perfect than others1
Our job as investors is to acquire the knowledge to look beyond appearances and into the fabric of the deal to see what’s not obvious.
You’re an inspiration Ann. I’m saving you a big hug for when next we meet.
– Steve
Awesome article Steve. Keep it simple, I like that especially. One of my favourite quotes from a fantastic recording:
” People are always blaming their circumstances for what they are. I don’t believe in circumstances. The people who get on in this world are the people who get up and look for the circumstances they want, and if they can’t find them, make them. ”
George Bernard Shaw:
AJ! Legend!
Love your quote. Thanks for making it.
Stay well.
– Steve
One of the many morals my German parents raised me with was ‘a sparrow in the hand is better than a dove on a roof’. On my property investing journey since 2012, it has been so profitable to be faithful to the ‘little sparrow’ investments I’ve been given right in my hands so far….rather than waste time being jealous or delusional about ‘doves’ on roofs I can’t even reach…..yet! ;)
Thanks Steve (and Jason) for everything you’ve imparted to me through your lives and resources.