Property Myths Exposed

This article by Peter Thornhill for Westpac’s Online@W was challenging. Peter used to be General Manager of MLC and is definately biased toward equities. Westpac really should admit their marketing bias in presenting these stories too.

I ‘d like your reactions to the article as well.

I actually agree with the Peter 100% on the Myths. Especially never confuse familiarity with expertise. Folks, steal that slogan. Tape it above your monitors. It will keep you humble and save your bacon one day. I’ve just done it.

Myth 1: I know property
Nope! Remember “Nobody Knows Anything” by Willliam Goldman (I wrote on is 20 August 2002). That’s a motto to live by. Just like “If you can’t tell the sucker at the poker table, it’s you”.

Myth 2: Property is always a good investment
This one always comes from people who don’t own a lot of it. Lots of great property investors go through cycles where they say the can’t find deals that suites their criteria. Often they miss out on great deal because of it. But beware “always”.

Myth 3: You can’t lose money in property
hehehe try adding “…unless you have a bank loan”

Like I said I agree with the man. But I still like property investing.

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5 Comments

  1. G’day Paul,
    I was intrigued by this comment :-
    Wise investors like the liquidity of shares

    And my immediate thought was “yeah, sure, but ALL of your wealth in that?”

    I think the bloke makes some sense as long as you consider HOW MUCH of your wealth should be “immediately available” And what would that figure be? 20%? 30%? 50%? Surely not ALL of it?

    He sounds like a shares advocate through and through – fair enough – but to the exclusion of all else, ….. Not me.

    Regards,

    Les

  2. Hi Les

    Yeah I know what you mean. No way would I be comfortable with options trading if it represented 100% of my assets.

    I think the point was not so much promoting liquidity=ready cash. Rather property is a major pain to trade in and out of. That is both it’s strength and weakness. You aren’t going to sell your investment property to pay an unexpected amex bill.

  3. It is now 2008 – five long years since anyone posted on this page. Well, isn’t hindsight a marvellous thing:) It would seem that New Zealand residential property values have “almost DOUBLED” during this time!

    Nevertheless, there is yet another great saying that is most relevant to this discussion:

    “It’s not the timing of the market that counts, it’s the time IN the market!”

    http://www.compasspropertyinvestments.com

  4. Just one more thing: in relation to your well-intentioned comment that states “you can’t lose money in property” and then qualifies it as a myth… I have a business in the
    rent guaranteed property field. Now, while it is true that you can get financially hammered if interest rates rise too high (causing your shortfall to get out of hand) there are some compelling positives in having at least ‘some’ rent guaranteed investment property in your portfolio. In New Zealand, our clients get the backing of Housing New Zealand when it comes to rental guarantees…and in all honesty, provided a person sticks in for the long haul, the risks of ownership are exceedingly small.

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