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Here’s what Einstein can teach you about property investing

Michael Yardney
·5-min read
Property investing using Einstein wisdom. Source: Getty
Property investing using Einstein wisdom. Source: Getty

Property investment is certainly not rocket science and while you don’t have to be a genius to succeed in real estate, it never hurts to learn from great minds when trying to achieve great things.

So let’s look at some quotes that have been attributed to Albert Einstein and see how we can turn these pearls of wisdom into profits from property.

1. "If you can’t explain it simply, you don’t understand it well enough."

There’s lots to learn about success in real estate and this can be overwhelming for the beginning investor.

When you're a beginner it may seem like there are millions of bits of information you need to understand, while in fact successful investing boils down to a few sound, solid and time-tested principles.

So don’t rush in.

Take the time to educate yourself and learn what’s really possible rather than get fooled by some of the smoke and mirrors get rich quick schemes which promise you millions with no money down and little effort.

2. "Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will spend its whole life believing that it is stupid."

We’re all different, with different abilities and different strengths.

That’s what makes the world interesting isn’t it?

You’ll be good at some things and not others.

It’s OK if you’re not a genius in tax or structures or finance.

Property investment is a team sport so surround yourself with experts in the areas you’re not good at.

3. "A little knowledge is dangerous. So is a lot."

Many first time investors jump into the market without having a plan or a good team of advisors around them.

They buy one of the first properties they come across, often close to where they live (because it’s familiar) or where they enjoy holidaying or where they want to retire.

These are all emotional reasons which almost always lead to investment disaster.

The problem is these investors don’t recognise that property investment is a process, rather than just an event.

It starts with the strategic property plan for your financial success and you’ll need a sound understanding of property investment strategies and structures, plus a good knowledge of the market on which to make your buying decisions.

But there’s also such a thing as information overload.

I’ve seen many would be investors not take action and stuck in analysis paralysis.

Either they’re confused by the many mixed messages constantly barraging them, or they’re spending too long trying to educate themselves so they understand “everything”, or they spend too long looking for the “perfect” investment that ticks all the boxes.

I’ve found while these people are waiting for the market to be "perfect", the realists are busy buying properties and making money.

4. "It takes a touch of genius and a lot of courage to move in the opposite direction."

This is a brilliant quote, because the practice of going against the crowd and investing counter cyclically is what makes many successful property investors stand out.

Warren Buffet put it eloquently when he said: “Be fearful when others are greedy and be greedy when others are fearful.”

Sure it is easy to jump on the buying bandwagon when everything is rosy with the markets, buyer sentiment is high and economic conditions are favourable.

But you need courage and foresight to take action when everyone else is paralysed by fear and uncertainty.

Making your own path rather than following everyone else’s can be daunting, but in doing so you will enjoy many more lucrative opportunities as an investor.

5. "In the middle of difficulty lies opportunity."

Just as every property boom paves the way for the next downturn, each property slump sets the scene for the next upturn.

Many investors who own substantial property portfolios today sowed the seeds of their fortune during the difficult economic times when the property markets slumped over a decade ago around the time of the global financial crisis, while others started growing their portfolios in the downturn following the 2003 property boom or the severe downturn 12 years before that.

They took advantage of the opportunities the buyer’s market of their day provided and then waited for time, compounding and leverage to work their magic.

6. "The world we have created is a product of our thinking; it cannot be changed without changing our thinking."

If what you are doing is not working for you now, then something needs to change.

When things don’t work out most investors jump from one strategy to the next.

They try positive cash flow properties and when this doesn’t work, they try off the plan or looking for the next “hotspot” or renovations.

But this is rarely the solution.

Instead, investors need to become financially fluent so that they understand the economy, our property markets, finance tax and real estate law. 

Get a good team around you, engage a mentor who can see your blind spots and join a mastermind group of like-minded investors, so you develop the right mindset. 

7. "Anyone who has never made a mistake has never tried anything new."

The power of all this knowledge is in its implementation. It has no benefit unless you take action.

Some things won’t always work out as you’d hoped and of course there are risks involved in getting into property.

But there are bigger risks to your financial security if you don’t.

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia's leading experts in wealth creation through property and writes the Property Update blog.

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