4 lessons from 20 years of property investment

While many successful investors would advise against this strategy—especially for beginners who have yet to acquire the necessary knowledge on property investment—it worked out fine for him, and within two years, he witnessed the doubling of the property’s value.

Years and a couple of property selling later, John has successfully started a business of his own, leaving a six- to seven-year gap in his property investment journey.

He got himself back into the property game after realising the value of good education and mentorship, as well as his dream of providing a financially secure future for his growing family.

“I live on the central coast now of New South Wales and they’re just poles apart in terms of flat barren land in country Victoria versus hill [side], surfing condition on the central coast,” John added, “I think it’s good to get a balance.”

The property investor shares some of the most important lessons he learned in a span of two decades, and the goals he desires to achieve now that he has the pedal down once again:

1. Property investment has no room for emotions

John believes that every person looking to invest in property will do well if they focus on understanding the key drivers of growth.

“Obviously, emotion should never play a part… You’ve got to analyse it for how it’s going to fit in your portfolio, and that’s never going to be the same as the next person. Then, it [also] comes down to affordability,” he said.

2. No two property portfolios are ever exactly the same

It is important that property investors understand their own goals, capabilities, and limitations, as well as the current status of their own property portfolio, because only then can they determine the right properties to buy.

“I’m actually in the game of property coaching at the moment and I’ve met a lot of clients who want to buy what their friends bought, but the yield doesn’t stack up for them because of their income differences… It’s completely the wrong purchase,” John said.

“You can see why a lot of investors get it wrong—purely because they don’t analyse their own situation.”

3. Beware of the wrong properties

Like many investors who have found success in the business of creating wealth through property, John also believes in striking a balance between good cash flow and good capital growth.

“While we can’t determine how capital growth’s going to play out, I think if you’ve got a reasonable cash flow in your portfolio instead of going straight to those high blue-chip properties, then you’ve got a reasonable balance in the event of any downturn in your life,” he explained.

Smart Property Investment’s Phil Tarrant, who is also an avid investor, agrees that this balance will help a property investor continue his journey no matter the unpredictable circumstances in the markets.

According to him: “They might have a property which is rocketing in value but the yield on it is poor so they can’t afford to keep it, and it puts not only financial stress on them but also emotional stress… It could be really detrimental to have the wrong properties in your portfolio.”

4. Don’t sell too quickly

During the first few years of his property investment journey, when he admittedly didn’t know any better, John tended to sell his assets as soon as he sees a reasonable gain.

“In the early days, without that real knowledge, it was, ‘Okay, we’ve seen a gain, let’s move it on…’ We got our $50,000 or $100,000 out and think we’re rock stars only to realise in the next 10 years that it doubles again,” he reminded his fellow investors.

At the end of the day, the property investor believes that success in property investment can only be achieved with continuous education and the right mentors who are willing to understand your portfolio and your aspirations for it.

“I think that gives you real choices in your life," John said.

"Whether that’s made up from three properties or ten properties, I think it’s [all about] the performance and where they’re located. There’s so much out there you can do to have that work-life balance. We don’t have to work until we’re 70 if we’re smarter about it and can create some passive income along the way.”

Tune in to John Pidgeon's episode on The Smart Property Investment Show to know more about his experience buying and selling in different markets, how aligning himself with a mentor helped steer his journey in the right direction, and how striking a healthy balance of cash flow and capital growth has enabled his portfolio security in the face of a downturn.