Why ‘chasing the cash flow dream’ is a big mistake for this property investor
Positive Real Estate’s Sam Saggers has made a number of missteps throughout his property investment journey—which began back in his early 20s—but for the property investor and real estate agent, the biggest mistake he has done was clinging to the idea of “chasing the cash flow dream.”
According to him, he was taking risks and pushing out to regional areas in Australia only to see returns decline after a while.
“There was a while there where yields were all the flavour, and to follow a good yield, to get a high return… sometimes, you have to take more risk,” he explained. “I bought a property 15 years ago in Moree. It's worth about $120,000 at the time I bought, and it's probably still worth about $120,000. It's done absolutely nothing. It's just been stuck in this limbo land for a very, very long time.”
Many budding property investors are often told to chase the yield in order to get high return, but he learned that it’s always better to grow one’s portfolio by purchasing properties in good capital cities. According to him, had he been given the chance to do it all over again he would be doing more research to find better assets that could help him succeed in the business of creating wealth through property.
“Still to this day, I get a 10 per cent return, which equates—after all my outgoings and strata fees and this, that—[to] about $10 a week. Which doesn't make you wealthy. If I had my time again, I probably wouldn't have bought that property because to be blunt, there's not too many buyers in the market for that type of property. The only people who would be buying it would probably be unskilled investors," Sam said.
His advice for prospective property investors is to don't rush off for the so-called "cash flow dream." At the end of the day, take your few missteps in property investment as opportunities to learn and identify your goals, build a good strategy, and make a concrete plan of action to rise above your mistakes and ultimately achieve your financial goals.
He concluded: "If I was to take that money and put it into a better-performing vehicle, I would probably be steering my money towards a good capital city rather than rushing off for the cash flow dream."
Tune in to Sam Saggers' episode on The Smart Property Investment Show to know more about the impact of aircraft noise on property prices, as well as the relevance of so-called "property bubbles" investors' journey.
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