How To Identify An Armchair Expert
Our sixth in our series on fears that stop many people from investing in property is on armchair experts.
What’s an Armchair Expert?
In short, they’re someone who passes on unsolicited advice or expertise from their (rather comfortable) armchair, even though they have no solid education or experience in the area they are talking about.
Picture your Great Aunt Beverley, sitting back in a faded armchair at your yearly family gathering, jumping into everyone else’s’ conversations every now and again, offering advice (whether its wanted or not) on parenting, marriage, current fashions, and careers, none of which she has done particularly well at (sorry Bev).
A Story About My First Client
When it comes to property investing, armchair experts can be very damaging if you let their advice take hold. Here’s a classic example of a time when (thankfully), such a person was ignored…
I put my very first client into a property worth $450,000, with a $60,000 deposit. Within 12 months, that property had gone up to $600,000. So, in just one year, he had essentially added $150,000 value to his initial $60,000 investment. Not bad, right?
The next thing we did was use that equity to go and purchase an additional two properties. Then we organised a self-managed super fund with a financial planner to help him get into another property. This meant that in the space of just two years, this client had bought four properties and had a portfolio valued at over $2million. All of the properties were paying their own bills. Here’s where the magic happens… when you have a property portfolio worth that much and the market goes up even just 10%, you make $200,000.
What’s really magic about it is when you consider the alternative methods of making $200,000… like slugging away at your day job for years (for most people), and sacrificing hundreds and thousands of hours you could otherwise spend with your loved ones or doing things you enjoy.
The interesting thing is, though, this client almost missed out on such an epic win. And it was all because of an armchair expert. After his first year, he opened up to me and said that he’d nearly pulled out of investing in his first property (the one that really got him on track) because when he went to work the next day, his best mate and colleague said that he’d never heard of the town he was planning to invest in. And it therefore, can’t be a good place to invest.
Fortunately, my client decided to call me back the next day and hear about why the investment was going to be a winner. He decided that although his best mate was a good bloke, he didn’t actually know what he was talking about with property investing.
And you can bet that my client was very glad he ended up buying that property, instead of listening to his friend! After all, he ended up with $2million worth of property in a very short space of time!
It might be your Great Aunt, your best mate, your colleague, or someone else you might normally trust. They might love you and have your best interests at heart, for the most part. But beware of their opinions on property.
Just because they make a mean lasagne, are really good at their day job, got an A in high school math, or play an awesome game of tennis on the weekend doesn’t mean they are qualified to advise you on property.
Put your trust in the facts and only listen to an experienced mentor who has evidence of their own success in property investing. When it comes to family and friends, if they’re the type to offer unsolicited armchair advice, its best to keep your plans to yourself!
Daimien Patterson is the CEO of Integrity Investment Properties, a property investment company based in Australia. He regularly produces books, blogs, and videos on the topic of property investing. Head to [integrityinvestmentproperties.com.au] for your free copy of Daimien’s book, Safe as Houses.