Property investing is not a game of perfect. You never know how an investment is going to perform over time and you can’t predict the future.
But the good thing is that you don’t have to. Simply being above average is more than enough to build a substantial property portfolio that can set you up for life.
With the Australian Open finishing recently and tennis being on people’s minds, there’s a great analogy that we can use to describe how to succeed in property.
In 1970, one of America’s leading scientists Simon Ramo wrote a book about his favourite pastime called Extraordinary Tennis For the Ordinary Player. Over time, the book has become a hit because of the important lesson that it teaches.
Ramo suggests that amateur tennis game is determined by the loser. Amateurs watch professionals play tennis and try to hit like them. But they don’t have the skills and end up making a lot of mistakes.
Most amateur tennis players lose matches because of the number of mistakes they make. Not because of their opponents being better than them and hitting winners.
On the flip side, at the professional level, the game is decided by being able to hit winning shots. Professionals are far more competent at the basics. They don’t make the level of unforced errors that we see others making.
Ramo believes that amateur tennis is a loser’s game: 80% of points are lost on unforced errors. You win by steering clear of errors and waiting for your opponent to make mistakes. If you can own your first serve, second serve or return of serve, then the points are wrapped up.
Professional tennis is a Winner’s Game: 80% of points are won on incredible shots. Cutting back mistakes is not enough in itself. You have to swing for the exceptional play.
So how does this relate to property? Well if you’re a professional property investor or developer, you are going to have to take on bigger projects, more risk and do the basics very well to get ahead.
You can imagine that the likes of Harry Tribubuff are very good at what they do and these days, only takes aim huge scale projects.
While that is great for these people, for most everyday investors, you don’t need to do anything out of the ordinary to get great results. In fact, all you need to do is outperform the average.
In tennis terms, you just need to make sure you are not making any big mistakes and that will mean that you are going to outperform 80% of the other people playing the game.
In practice as an investor, you need to focus on simply getting the basics right. That means you need to buy in the right areas. These are ones where there has been a long history of growth. Blue chip areas are perfect for this.
Next you want to buy the right type of property. If everyone in an area wants houses, then don’t go and buy an off-the-plan apartment. Find out what the market wants.
Then finally make sure you have all your ducks in a row when it comes to your personal finances and ensure that you can hold onto the property for the long term.
Simply doing these basics will set you apart from the crowd and allow you to outperform over the long term.
By just buying well and holding, and not making big mistakes, like buying in a new housing development or an off-the-plan apartment, means that you are likely going to outperform the average.
All you are doing is not making those unforced errors. But that’s often all it takes to get ahead. That’s why property investing is so powerful and it’s why it’s made so many people a lot of money over a long period of time.
Stick to the basics and you will win.
