Experts
While you are preparing to purchase a property, be prepared for ‘experts’ to try to talk you out of doing things.
I can give you a wealth of examples, but here are a few:
1. Valuers
When I purchased our shops a few years ago for $400,000, a valuer friend asked me “if it’s a good deal, why hasn’t someone else bought it?’. Today, it has put probably $150,000 directly in my pocket (after paying interest), and is worth over $900,000.
Interestingly, with that logic, you could never buy a good deal.
2. Lawyers
When we purchased a residential property for $240,000, I had to add my wife’s name on the title, to help us get finance. The bank insisted that she independently see a lawyer, before she signed a particular document.
When my wife came out from seeing the lawyer, she was worried. She nearly pulled out of the deal. The lawyer had explained how dangerous it was to be responsible for a debt. All sorts of dreadful scenarios were concocted, all leading to heartache and poverty.
We decided to buy anyway, and within four years, we sold the property for $680,000. Glad we weren’t talked out of it by that doom and gloom lawyer.
3. Bankers
With our latest property, I contracted to buy a 1.4 million office, subject to obtaining finance. I emailed my long-term banker: could he help us get finance?
He quickly replied, “you can’t get finance for this property. But don’t worry! I’ll write you a letter which will get you out of the deal”
The implication being that I was some sort of idiot to get myself in that position, but he would kindly help me out of my predicament.
We found another bank, bought the property, and it is now worth 1.6 million.
4. Real Estate Agents
We had the real estate agent who did not pass our offer onto the vendor. He told me “the vendor is not going to be interested in that offer” After a week, I called the vendor direct (which was a bit naughty) and asked him if he was interested in my offer. He was shocked that he didn’t know about our offer. He rang the agent, yelled at him, then the agent yelled at me. It was messy there for a day or two, but the vendor accepted our offer.
5. More lawyers
The latest commercial property I mentioned above: we had terrible trouble getting finance, and we didn’t settle on the due date. We were charged penalty interest of $18,000. For various reasons, we felt this amount of penalty interest was unfair.
On the day we were finally ready to settle, we protested the penalty interest. The vendor said “well, you pay it, or we won’t sell it to you, and we’ll put it back on the market tomorrow. Your choice”.
Our lawyer did not want us to settle, and suggested we walk away from the deal, rather than get slugged like this.
But we ate it up, went ahead with the purchase, and as already mentioned, the following month it was valued at 1.6 million. So we paid $18,000 to make $200,000. Bigger picture.
6. Accountants
Have I mentioned that I am interested in aircraft? Well, I am building some hangars at the moment. When I mentioned this to my accountant, he said “you’re not likely to make money doing that. I mean, people may as well build their own. Why would they buy one from you?” In fact, there are many good reasons why people will buy from me, rather than build their own. My accountant has never built a hangar.
So, when your expert gives you advice, you may want to ask yourself: “is this expert obscenely wealthy?” If not, then do they know everything about the topic of building wealth? Unlikely. So feel free to take their advice with a grain of salt.
Please note that I’m not telling you to assume everyone else is an idiot and ignore them. You can learn a lot from listening to other people. I’m just saying that ultimately, you have to make your own decision.