Former US president Bill Clinton’s most famous quip was, ‘it’s the economy stupid’ and nearly 30 years on it’s still ringing in my ears. So many people I speak to have all sorts of ideas and stories about real estate today, but when it comes to having a clear strategy……………..silence!
This time last year all of the “experts” were talking about not if property was going to drop in value but by how much. Some were predicting loses of up to 30% as a result of the once in a century pandemic.
We know now that didn’t happen.
Our approach to it was different to most. With a motto of “make the most of every crisis” we thought it was the best opportunity to take advantage of low interest rates and seize the once in a lifetime opportunity and go against the crowd. As we now know, the bounce back in the economy was much quicker than anyone predicted and now the crisis is FOMO!
So how did everyone else get it so wrong?
Firstly, the media thrive on a crisis. Importantly, too many people didn’t look at the numbers, they just got caught up in the doomsday predictions instead of analysing the real situation.
To me, the key numbers are that: it would cost the average household about 14% of its disposable income to buy a $1m home. For the past 40 to 50 years that sat around 30%. Yes, the market has a long way to go and migration is not happening, but a couple of things have been happening which has offset any issues caused by that. Expats came flooding home which coupled with a surge in births over deaths easily replacing migration figures.
So, the question to you is: Where do you see yourself in 2025 and 2030? That’s the question I ask clients every day. Few have a clear picture; my best guess is only one in ten have thought about it.
Many have a clear picture of where they have been in the past 10 years or so, and some have an idea on where they are now but 2025/30 seems a little too overwhelming.
I get it, there is so much to digest and every day it seems like there is more news to add to the current overload.
That’s the reason clients have a strategy call with me, to flesh this all out; but for every 100 clients I have spoken to there are 300 that haven’t taken advantage of the opportunity. That’s what I don’t get.
A strategy is knowing exactly where you are today and having a clear picture of where you want to be in five to ten years. It’s also important to think about how you can get there; your levers and resources. You’ve heard me say many times “he (or she) who has no goal, has no direction”.
I’ve been trying my hardest, since COVID became a great trigger for us in real estate, to get everyone to lift their head up and seize the day. I know it’s hard and by doing so you’re definitely going against the grain.
But I can say this: its motivating. It’s a personal game changer as well as financial. It’s also a key discussion you should be having with your spouse and kids: reflect on what’s happened and make a game plan on what you’re doing next. I’ve been pushing James and Alex to do everything they can to make the most of what the market has gifted us as real estate investors today.
Which leads me to James Fitzgerald’s newly published book, BulletProof Investing. I highly recommend you all read this and importantly give it to your kids and discuss the “habits of our generation” and what you would have done differently in hindsight, particularly around money and finances.