These 2 Skills May Give You An Unfair Advantage in Property Investment

Updated: Jan 23

If you're not careful, the newspapers will have you hating the people who are oppressed, and loving the people who are doing the oppressing - Malcolm X

If I asked you today, "Is organic food better than conventional food?" In all probability, your answer would be, "Yes, it is."

News can damage perception

I mean, it's logical - organic is natural, does not use synthetic pesticides, and is farmed sustainably. Therefore, it is more nutritious and better for the environment.


Everyone knows that paper bags are better than plastic bags. You do too, right?


To arrest global warming, the number one antagonist that we should train our guns on is, of course, fossil fuels.


The world is also becoming more and more decadent is it not? Things were much better in the previous generations and it's only been going downhill since then.


Where am I going with all these statements? What does it have to do with you and property investment? Bear with me for a moment...


THE TRUTH OF THE MATTER


All the assumptions above are wrong or at least growing evidence is proving them wrong. Organic food has no significant superiority over conventional food.


I hear you saying, "But it is more natural, does not use synthetic pesticides and the seeds are not GMO!" Yes, you're right but still, none of these give organic food a significant advantage.


Organic food does use pesticide but natural pesticide. However, as this video by Kurzgesagt points out, toxic is toxic whether synthetic or not. Organically grown food have not shown nutritional advantages and require more land which increases its carbon footprint.


The fact of the matter is, we don't eat enough vegetables and we need to increase that; organic or not.


Paper bags are as dangerous to the environment as plastic bags. Yes, they decompose better but its production produces more pollution, consumes more energy (up to 4 times), uses more water, and results in more waste.


One study by the Australian government, found that the carbon footprint of paper bags are higher than plastic bags.


Next time you're at one of those "environmentally friendly" retail outlets that give you recycled paper bags, think again. Recycled paper consumes more fuel than making a new bag.


As it turns out, the meat and dairy companies are on the path to overtaking the oil industry as the world's biggest polluters. Yes, eating meat and consuming milk is killing the planet and by 2050 this industry will be responsible for 80% of allowable greenhouse gases.


You should not only be buying an electric car, but you should also be reducing your meat and milk consumption.


Finally, there is very convincing evidence from Dr. Max Roser, founder of Our World in Data, that the world is actually a much better place today in almost all aspects of human life including literacy, poverty, health, freedom, and education.


It was not better 200 years ago. It was not better in our grandparents' generation. And it was not better in our parents' generation. It is better today. Watch this inspirational video narrated by Dr. Roser on how better off we are today than just 50 years ago.


DON'T BELIEVE THE HYPE


Why is the perception of the majority so wrong?


To most people, it would be almost impossible to imagine meat and milk industries as soon-to-be largest polluters in the world. It would be even more absurd if they found out that "emissions" from cows are doing more damage to the planet than CO2 from cars.


The majority of people think the future is bleak because of the amount of bad news we're exposed to everyday.


Bad news sells.


Discussion in the public sphere is also driven by corporate and political interests. So we're not equally exposed to information. This creates a perception bias and this bias is well and alive in the property industry.


And here is the point of everything I've written above...


If you want to prosper as a property investor, you're going to have to take the blue pill and go down the rabbit hole.

That means, not being influenced by the hype but having a solid foundation in the fundamentals of the property market. Building this solid foundation can take some time but to start, there are 2 skills you can develop that will give you a huge advantage.


THE 2 SKILLS THAT WILL GIVE YOU AN EDGE


When I started researching property cycles, I went through as many reports as I could. One of these reports was written by Dato' Mani Usilappan, former D-G of the Valuation & Property Services Department.


Dato' Mani is a valuer with a keen eye for facts and data. He played a key role in the founding of the National Property Information Centre (NAPIC) and is highly respected in his field. In his report on property cycles, he cites 3 observations made by researchers Phyrr, Roulac, & Waldo (1999).


The 3rd observation is a recurring theme that I find again and again with people who are successful in the property market and this is where I derived the 2 skills necessary for you to become very prosperous in the property market.


The observation I refer to is this - good timing and a degree of contrarianism are essential ingredients to being successful in the market.

  1. Good timing, and

  2. A degree of contrarianism

What does this mean?


Here is an excerpt from Dato Mani's report titled, The Property Cycles in Malaysia 1988 - 2002: A Review...


Timing is the key to successful investing. Investors must be willing to make significant changes in their portfolios to take advantage of constantly changing market conditions. It should be recognised that over the real estate cycle, most average investors guess wrong a large percentage of the time because they “gallop with the herd" and follow "conventional crowd wisdom". In contrast, successful investors that consistently outperform the market average are willing to follow a path contrary to that of the masses. Thus, good timing and a degree of contrarinism are key ingredients to successful investing.

This in a nutshell is how you time the market - don't "gallop with the herd."


You can also read my post on the 18-year property cycle to gain further understanding on cycles. I am not a proponent of trying to time the market because it is not an exact science. However, knowing where we are in the cycle can provide a rough gauge.


Hone these 2 skills, and start understanding property fundamentals. You will find yourself doing very well as a property investor. In my book, The Ultimate Guide to Buying Property, I cover the most important fundamentals that you need to know. You can download it for free here.

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