A Totally New Look At Property Investment

By Richard Ivey

Most investment counsels I have seen make an assumption that if the investment performs well, then any financier can make good money out of it. In other words, theexternal factorsalone decide the return.

I disagree. Consider these for example:

– Have you ever heard of an instance where two property investors bought matching properties side by side in the same street at the same time? One makes serious money in hire with a good tenant and sells it at a respectable profit later; the other has lower lease with a bad tenant and sells it at a complete loss later . They can be both using the same property management agent, the same selling agent, the same bank for finance, and getting the same guidance from the same investment consultant.
– You may have also seen share stockholders who purchased the same shares at the same time, one is compelled to sell theirs at a loss due to private circumstances and the other sells them for a profit at a better time.
– I have even seen the same builder building 5 matching houses side-by-side for 5 investors. One took 6 months longer to build than the other 4, and he ended up having to sell it at the wrong time due to personal cash flow pressures while others are doing much better financially.

What's the sole difference in the above cases? The speculators themselves (i.e. Theinternal factors).

Over time I have reviewed the fiscal positions of a couple of thousand backers personally. When folks ask me what investment they should get into at any particular moment, they expect me to compare shares, properties, and other asset groups to advise them the correct way to allot their money.

My answer to them is to always ask them to go back over their past history first. I would ask them to list down all of the investments they have ever made: cash, shares, options, futures, properties, property development, property renovation, etc. And ask them to tell me which one made them the most money and which one didn't. Then I suggest to them to stick to the winners and cut the losers. To paraphrase, I tell them to invest more in what has made them real money during the past and stop making an investment in what hasn't made them any money in the past (assuming their money will get a 5% return a year sitting in the bank, they need to at least beat that when doing the comparison).

If you take time to do that exercise for yourself, you may very fast discover your fave investment to speculate in, so you can concentrate your resources on getting the best return instead of allotting any of them to the losers.

You may ask for my rationale in selecting investments this way rather than looking at the hypotheses of diversification or portfolio management, like most others do. I simply believe the law of nature governs many things beyond our scientific understanding; and it's not smart to go against the law of nature.

For instance, have you ever spotted that sardines swim together in the sea? And similarly so do the sharks. In a natural forest, similar trees grow together too. This is the idea that similar things attract each other as they have affinity with one another.

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