Why Smart Investors Love Negative Sentiment - July 2023

By Guest Blogger, Terry Ryder, founder,

hotspotting.com.au and propertyU

Most Australians who invest in real estate fail to achieve their goal of creating a large and sustainable property portfolio.

Over two million Australians own an investment property but 70% of them have just one property and another 18% have two. That’s nine out of ten with just one or two properties. Those who own five or more are less than 1% of the total.

And here’s why so many fail to achieve great success: they're herd animals.

They lack the ability and mindset to think and act independently.

That “less than 1%” who have a portfolio and a decent crack at success with property investment? They’re the people, the minority of people, who have a plan and are willing to invest in information and advice to make good decisions – and generally are able to take action where most people are adopting a “wait and see” approach.

They accumulate good real estate assets and keep them. They make their next purchase when they’re ready to add to their portfolios, regardless of public sentiment or the tone of media or the trend with interest rates or the (alleged) state of the market.

The successful investor thinks and acts regardless of all that white noise in the background.

Indeed, they love periods of uncertainty and generally negative sentiment such as the first half of 2023. They recognise this is a good time to buy, because most Australians are sitting on their hands, discouraged by negative media, high inflation and higher interest rates.

That person – that investor who thinks and acts independently - is very much the silent minority.

The noisy majority comprises those who are driven by sentiment, media soundbites and RBA board meetings.

The independent thinker sees opportunities where others see problems.

While many people have been spooked by rising interest rates, the independent property investor recognises that it’s still possible to achieve good investments that pay their own way, because there is a chronic shortage of rental properties and rents are high and rising.

A smart, well-researched investor also knows that property tends to thrive in times of economic disruption. In uncertain times, people fall back on the highly dependable brick and mortar. 

This happened when the pandemic struck in 2020 and we saw a spectacular property boom, contrary to the forecasts of the economists – and it’s happening now in 2023 despite 12 interest rate rises and high inflation, also contrary to the predictions of big bank economists and others like them.

The key factor for the successful investor – those rare individuals who do this well – is that they understand this very simply and important philosophy:

“Build your team before you build your portfolio.” 

Successful investors understand the importance of having a team of experts around them: 

•    An accountant who understands real estate
•    A lawyer who can advise on important matters like the best entity to buy with
•    A good mortgage broker who can advise on the best loan deals
•    A good source of expert, independent research data
•    A quantity surveyor to advise on tax deductions from depreciation
•    Mentors who have experience with real estate investment
•    A good buyers’ agency which offers genuine expertise and the time-saving service of finding the best properties that suit the investor’s criteria

Successful people treat property investment as a business – and understand that in business you have to spend money to make money.

That means a willingness to spend money on advice, expertise and information – to provide the best chance of making the right investment decisions.

Those who penny-pinch, and refuse to do this, often end up making poor investment decisions – and become one of those 90% of investors who never get beyond one or two properties.

They tend to be “wait and see” people who miss the best opportunities to buy well ahead of major growth phases, such as mid-2020.

People who say they want to wait and see what happens – with interest rates, or the next election, or the next ABS data on inflation – usually never take action.

They will be left behind by the independent thinker who sees the opportunities that exist in markets across Australia, amid all that economic disruption, in 2023.

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