The president of the Real Estate Institute of Australia has concerns about investors who are in the current market for a quick win, and is finding they are losing out to those with longer investment horizons.
With over 20 years of experience in the property industry, Malcolm Gunning, president of the REIA, has seen his fair share of property cycles in the Australian market.
A tried and tested strategy of successful investors, Mr Gunning said on the Smart Property Investment Show, is to aim for long-term gains rather than short-term wins.
“You get lucky when you hold real estate for a long time,” Mr Gunning said.
“Anyone who comes in and talks to us and says, ‘Well, I want to … get in, make a quick hit and get out,’ I say well good luck.”
He warned though that getting caught up in the negativity of the market’s downturn is counter-intuitive to investing, as it only really impacts those who decide to sell their property.
“The only time it’s going to affect you is if you’re going to sell, and most of us, you don’t sell real estate unless you really need to,” Mr Gunning said.
“I think you sell it when you’re 75 ... when you’re older and you want to cash out and you might want a bit of money in the bank.”
Even still, Mr Gunning has noticed long-time investors are holding onto their portfolios past the age of retirement, and instead are holding onto them to pass onto their children.
“Our children are going to inherit plenty because we don’t sell real estate,” he said.
“We’ve got clients of ours, who’ve got millions and millions of dollars in property and I say, ’Well, why don’t you travel at the front end of the plane, why don’t you spend some money?’
“[They say,] ‘Why would I do that? I’m working for my children …’ and so our children of our age will do extremely well.”
In order to find true investing success, Mr Gunning suggests to keep your gearing in check stop obsessing over minute price rises and falls and to actually listen to what tenants have to say.
“Providing your gearing is reasonable, don’t look at your prices every now and again, don’t sit down and track like you do in a share market, … listen to your tenant, don’t get miserable with your tenant, fluctuate a little bit with them, (you’ve got to ride the wave with your tenants too), and you’ll be surprised, five years’ time, six years’ time, it bounces back very well.”