{"id":135879,"date":"2024-08-31T19:30:44","date_gmt":"2024-08-31T09:30:44","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=135879"},"modified":"2024-08-30T17:15:47","modified_gmt":"2024-08-30T07:15:47","slug":"the-long-term-benefits-of-property-investing","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/the-long-term-benefits-of-property-investing\/","title":{"rendered":"The Power of Thinking Long-Term in Property Investment"},"content":{"rendered":"

What\u2019s your financial time horizon?<\/p>\n

If you think about it, the average Australian has a very short financial time frame.<\/p>\n

Often they live week to week and wonder how they're going to get through financially till the next pay packet.<\/p>\n

Then there are some Aussies who think about the months or the years ahead.<\/p>\n

But, successful investors and business people think in decades.<\/p>\n

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Note: <\/span>In the fast-paced world of property investments, it's often easy to get caught up in the immediate challenges and setbacks.<\/p><\/div><\/div>\n

The fluctuating market, the occasional bad tenant, the slight miscalculation in property value; increased government interference - these hurdles can be incredibly discouraging when we're observing them through a microscope.<\/p>\n

However, the true property maestro understands the art of zooming out and perceiving the bigger picture.<\/p>\n

Once you adopt the habit of thinking in decades rather than months, everything becomes easier\u2026<\/p>\n

1. Mistakes Get Erased<\/span><\/h2>\n\r\n\r\n
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Every property investor, myself included, will attest to the mistakes they've made over their career.<\/p>\n

Maybe you've overpaid for a property, maybe you got too emotionally involved, or perhaps the renovation costs ended up much higher than anticipated.<\/p>\n

Or maybe you\u2019ve had the \u201ctenant from hell.\u201d<\/p>\n

These hurdles can be incredibly discouraging when we're observing them through a microscope, but as you expand your timeframe to a decade or more, they become mere bumps in the road.<\/p>\n

They fade, both in memory and in their financial impact.<\/p>\n

Mistakes, though unpleasant, are often our best teachers.<\/p>\n

Learn from them, but don't let them overshadow the broader journey.<\/p>\n

\"Debt\"<\/p>\n

2. Debt Gets Eroded<\/span><\/h2>\n

One of the constants of long-term property investment is the role of inflation.<\/p>\n

The government and the RBA will do whatever it takes to create a level of inflation of around 2-3%. They have to: it\u2019s one of the main ways they decrease their own debt.<\/p>\n

So over time, inflation's subtle effects mean your mortgage balance shrinks compared to your income and the value of your asset\u2026 even if you haven't paid off a significant chunk of your mortgage.

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While the numbers might not change, what they represent in the grand economic landscape does.<\/p>\n

So if you own good property don\u2019t worry about all the fuss in the media about inflation.<\/p>\n

Instead of dreading inflation, embrace it as a silent ally.<\/p>\n

When I bought my first investment property in the early 1970s it cost $18,000 and I went halves with my parents because I couldn\u2019t afford to buy a property on my own.<\/p>\n

We took out a $16,000 mortgage over 30 years having no idea how we were going to pay it off.<\/p>\n

Interestingly we were excited because we got $12 a week in rent at the time.<\/p>\n

Look what inflation has done to those figures.<\/p>\n

I still own the same property today, having built two townhouses on it, with a combined value of close to $4 million, and the rent today is well over $2,400 a week.<\/p>\n

Look what time and inflation have done for me.<\/p>\n

\"Timing\"<\/p>\n

3. Market Timing Becomes Less Critical<\/span><\/h2>\n

We know the property market is cyclical, experiencing its peaks and troughs.<\/p>\n

Sure we experience occasional downturns, like the 9% drop in property values in 2022 after most of our markets reached new peaks after the boom of 2020-21.<\/p>\n

While no one wants to buy at the market's peak, thinking in decades offers a liberating perspective.

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Minor market fluctuations shouldn't deter your investment strategy.<\/p>\n

Over a decade, any short-term losses are often compensated by significant property price appreciation, debt reduction, and consistent rental income.<\/p>\n

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Note: <\/span>Time, as they say, waits for no one. But for property investors, time can be an ally.<\/p><\/div><\/div>\n

Ten years will pass, regardless of our choices.<\/p>\n