What Einstein can teach you about property investing

Property investment is certainly not rocket science and while you don’t have to be a genius to succeed in real estate, it never hurts to learn from great minds when trying to achieve great things.

So let’s look at some quotes that have been attributed to Albert Einstein and see how we can turn these pearls of wisdom into profits from property.

1. If you can’t explain it simply, you don’t understand it well enough.

There’s lots to learn about success in real estate and this can be overwhelming for the beginning investor.

So don’t rush in. Take the time to educate yourself and learn what’s really possible rather than get fooled by some of the smoke and mirrors get rich quick schemes which promise you millions with no money down and little effort.

2. Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will spend its whole life believing that it is stupid.

We are all different, with different abilities and different strengths. That’s what makes the world interesting isn’t it?

You’ll be good at some things and not others. It’s OK if you’re not a genius in tax or structures or finance. Property investment is a team sport so surround yourself with experts in the areas you’re not good at.

3. A little knowledge is dangerous. So is a lot.

Many first time investors jump into the market without having a plan or a good team of advisors around them. They buy one of the first properties they come across, often close to where they live (because it’s familiar) or where they enjoy holidaying or where they want to retire. These are all emotional reasons which almost always lead to investment disaster.

While you need to have a sound understanding of property investment strategies and structures, and a good knowledge of the market on which to make your buying decisions, there is such a thing as information overload.

I’ve seen many would be investors not take action and stuck in analysis paralysis. Either they’re confused by the many mixed messages constantly barraging them, or they’re spending too long trying to educate themselves so they understand “everything” or they spend too long looking for the “perfect” investment that ticks all the boxes

I’ve found while these people are waiting for the market to be perfect, the realists are busy buying properties and making money.

4. It takes a touch of genius – and a lot of courage – to move in the opposite direction.

This is a brilliant quote, because the practice of going against the crowd and investing counter-cyclically is what makes many successful property investors stand out.

Warren Buffett put it eloquently when he said: “Be fearful when others are greedy and be greedy when others are fearful.”

Sure it is easy to jump on the buying bandwagon when everything is rosy with the markets, buyer sentiment is high and economic conditions are favourable. But you need courage and foresight to take action when everyone else is paralysed by fear and uncertainty.

Making your own path rather than following everyone else’s can be daunting, but in doing so you will enjoy many more lucrative opportunities as an investor. Because as Einstein said… 

5. In the middle of difficulty lies opportunity.

Just as every property boom paves the way for the next downturn, each property slump sets the scene for the next upturn.

Many investors who own substantial property portfolios today sewed the seeds of their fortune during the difficult economic times when the property markets slumped after the 2003 boom or the severe downturn 12 years before that.

They took advantage of the opportunities the buyer’s market of their day provided and then waited for time, compounding and leverage to work their magic.

6. The world we have created is a product of our thinking; it cannot be changed without changing our thinking.

If what you are doing is not working for you then something needs to change.

When things don’t work out, most investors jump from one strategy to the next. They try positive cash flow properties and when this doesn’t work they try off the plan or options or renovations. But this is rarely the solution.

Most unsuccessful investors blame the economy, the banks, the market, interest rates etc. All these are out of their control.

It (whatever “it” is that is stopping you achieve what you want) won’t change until you change.

This means to become a successful investor you must work on yourself first.

Become financially fluent so that you understand the economy, our property markets and the way world of finance tax and the law as they relate to real estate.

Get a good team around you, engage a mentor who can see your blind spots and join a mastermind group of like-minded investors so you develop the right mindset.

Attend (the right) seminars and never stop working on your own personal development.

And finally…

7. Anyone who has never made a mistake has never tried anything new.

The power of all this knowledge is in its implementation. It has no benefit unless you take action.

Some things won’t always work out as you’d hoped and of course there are risks involved in getting into property. But there are bigger risks to your financial security if you don’t.

Michael Yardney is a director of Metropole Property Strategists, who create wealth for their clients through independent, unbiased property advice and advocacy. Subscribe to his Property Update blog.