One of the most frustrating things about investing in property is not the shortage of information - but the plethora of misinformation.
Those seeking to learn online are confronted with numerous experts, gurus and thought leaders who confidently speak of having the secret to success. Again, the issue isn't that they don't have good information - it's that the relevant advice is lost in the noise.
Approaching friends, family and colleagues is often even worse. Everyone seems to have heaps of great advice that may or may not be based on real-world experience.
“I know a guy who…”
“I saw the story on the news about…”
And that's not taking into account outdated lessons, taken from markets long ago, or far away. Everyone's intentions are good, and nobody is trying to mislead you, but the biggest challenge with sourcing relevant information on effective property investment is working out what you need to know, and who is best to ask.
Here are some myths that still stubbornly hold on to people's attention.
Myth 1 - Only invest in places you know
This can also be combined with "I would never invest in X.”
The issue with these myths is that they make sense - if you don't understand the demographics, socio-economic realities and opportunities within a geographic area how can you effectively invest?
The issue with this approach is that it's incredibly limiting, and based on your personal bias. For example, just because you consider a certain area to be up and coming, or full of potential, doesn't make it statistically true. Plenty of property investors over time have fallen victim to their own opinions - thinking that urban sprawl would naturally end up in a certain suburb, but instead they found themselves lumped with a house surrounded by industrial parks.
Never assume that your own opinion is correct - trust science, evidence and take advice from proven experts.
Myth 2 - You Can’t Lose With Property
This is a popular myth based on mathematical fallacy - property is time dependent, and while the statistics point to a timeline of growth, you don't know how long the timeline is, and adopting an attitude that says you can't lose inhibits your ability to conduct a critical analysis of certain suburbs and properties. It's true, property is a far lower risk than some other investments - but should be treated with the care and respect it deserves.
Myth (s) 3 -
It’s better to buy close to the CBD
Never buy without street frontage
Always buy brick
The list goes on. The important thing to understand is that one occurrence of something happening doesn't make it true. Just because someone bought a brick house with street frontage and made a lot of money out of it, doesn't mean that all brick houses with street frontage will achieve the same result. The same goes for someone who bought in a certain area, or houses that are near the city - in every suburb, there is a property that someone has lost money on.
As with all of these myths, the best approach is to look at each property based on its merits and evaluate scientifically whether it will achieve the results you want. Decide whether it fits into your investment portfolio, and consider both your short and long-term planning.
Property presents limitless opportunities, but if you listen to everyone, you won't hear anything at all.