How this property investor learned his lesson on risk management after an ‘expensive mistake’

He shared: “I bought a lot of property very quickly. I just sold everything that I had in terms of the toys and bits and pieces… There was no other education around at the time. There wasn't advisers or buyer's agents or anything, so it was all learn as you go. But I knew it all, remember?”

Later on, he was introduced to a developer whose property brochure enticed him so much that he decided to buy two units—much to his regret.

“The site was better. The suit was awesome. It had water views. It was just going to be this big cash-flow producing thing,” he said.

“I thought, ‘You know what, let's not buy one of these, let's buy two’. So we did. It was an off-the-plan, on the harbour, serviced apartment. Everything that you shouldn't do, it was there.”

More than 13 years since he bought the property, it is still worth less than what he paid for and has actually been costing him a lot of money to manage.

“We bought it for… $360,000-odd. It settled and it valued much, much higher. It validated how awesome I was. I think there's some dodginess there, somewhere along the line, with the valuers. This is going back… 13 years or something like that. To this day, the property is worth less than I paid for it,” he said. 

“It gets worse. The gross rent that I get because it's a serviced apartment is awesome, but over 51 cents of every dollar goes to property management for them to put the bums in beds. That doesn't include my strata, doesn't include my rates, doesn't include my insurances.”

However unfortunate the circumstance was for him as a property investor, Steve used this as an opportunity to learn some of the most important property investment lessons he needed, including risk management.

“I don't think I could've ever learnt as much as I've done without actually going through that sort of pain,” Steve said.

His advice to budding property investors: Let education be your first personal investment as it could definitely affect how you manage and ultimately grow your own business of creating wealth.

In the process of seeking good education, find the best mentors in the people who have spent a lot of their time navigating their way through their own property investment journey—learn from their triumphs and missteps and do your best to find your own way to success.

Steve concluded: [Think about] risk. Cover it all and give yourself buffers. That really spreads throughout everywhere. That means, make sure your numbers are right, [as well as] everything like that. [Be wary of] risk.”

Tune in to Steve Waters' episode on The Smart Property Investment Show to know more about his first investment property and his worst investment property, as well the life lessons they taught him and his most valuable "nugget of wisdom."