Five lessons property investors can learn from farmers

How often have you thought to yourself, if only I had more money, life would be that much simpler?

Do you feel like you never have enough?

Are you constantly spending your salary the day it lands in your account and then eagerly waiting for the next payday so your stocks are replenished and you can start consuming all over again?

This is the unfortunate reality of how most people survive

They live to consume and, in turn, are ultimately consumed by the driving need to earn more money.

However, the problem with this logic is that often, the more money that comes to you when you have this mindset, the more you will ultimately spend.

Farmers do things differently

They are producers rather than consumers and work towards growing something from very little – a tiny seed in fact.

Smart property investors understand that they must nurture and grow their portfolio, producing the returns they desire in favour of consuming all they have, rather than ending up with nothing to show for it when they finally retire.

They share the farmer’s desire to see their efforts reap great rewards and understand the value of these five important farming lessons…

1. Look at your salary or wages the way a farmer looks at a seed.

In other words, instead of focusing on consumption and spending, think about how and where you can ‘plant’ that income to create a return on your investment.

This will shift your mindset from wondering what you can buy with your money today, to future asset growth, cash flow and income.

2. Be patient and look after your investment the way a farmer tends his crops.

A farmer understands the cyclical nature of primary production, nurturing his crops after planting and allowing time and seasonal influences to work their magic.

As a property investor, you need to understand that long-term market cycles (as with the seasons) and time in the market will ultimately determine your capacity to produce a post-work income through real estate.

3. Be selective with how you use your growing asset base, like a farmer is selective with his harvest.

A farmer takes the best seed from the top of his harvest to put aside for next season’s planting.

He certainly doesn’t scrape the bottom of the barrel, but focuses instead on quality.

As an investor, you need to keep an eye on your growing portfolio and know when to take out profit.

Now here’s the important part – in the asset building phase of your investment journey, you should only take out profit to reinvest for accelerated returns, just as a farmer re-sows the best seed to make sure each new crop is more bountiful than the last.

4. Each new cycle (or season) should be seen as a chance to grow your wealth.

The farmer never ceases to look for opportunities to grow his crop. When the next harvest comes around, the cycle is repeated and the accumulative effects of seed, plus time, plus harvest are repeated all over again.

Like the farmer, you don’t want to consume the fruits of your investment labours, but continue to look for new buying opportunities that will enable you to use that good quality profit to acquire even more superior assets.       

5. Work your investment portfolio, the way a farmer works his land.

The farmer does not sit back and hope and pray that this season’s harvest will be bountiful. Instead, he is pro-active in nurturing his land and ensuring his crops are fed, watered and weeded as necessary.

For property investors, the lesson is to be an active participant in the growth and sustainability of your portfolio.

This means taking care of your investments, regularly reviewing their performance and protecting them with necessary asset protection structures, cash flow buffers and insurances.

It also means keeping a close eye on the performance of your properties and if necessary, doing a bit of ‘weeding’ if you have underperforming assets that are threatening your harvest.

Remember, smart property investing is about the long-term returns you ultimately produce at the end of the day.

To find success in growing your own crop of high growth assets, you must change your focus from consumption to production.

It really is that simple.

Michael Yardney is a director of Metropole Property Strategists – creating wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author and writes the Property Update blog. Subscribe today and you’ll receive a free training video, The Golden Rules of Property Investment.