Recently someone expressed their remorse at having invested in a property. “House price didn’t move, cannot get rental, have to pay loan…”
Normally this is when a good Financial Advisor will step in and advise “oh, a property is a good diversification to stocks, building cost usually inflation and increase price, blah blah blah”
But this time I also add, “Ya lar, all those people who read books and attend seminars, nowadays too many smart people also buy property, no more double digit or triple digit returns anymore.“
Quite a number people know about constructive debt, growing assets and passive income theory. The success of the early property investors has everyone jumping onto the bandwagon, without understanding a single thing about investment. So what we need to realise about this STYLE of investing is that we are actually competing against another investor to make money. We want to buy when no one is buying and sell when no one is selling. Then we will get high returns.
However, there is also another style of investing which is more stable and longer term. This style, instead of focusing on how the returns are not great, focus on the buying opportunities and rental income when market is down.
So we have to be clear which style we are interested in and be prepared for the sustainability required. Some people want fast return, such a person might find out too late that this style might not work in all situations. Such a person might get disappointed and quit the market early.