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In New Zealand, Australia and the USA we currently have chronic cases of real estate mental illness.

Go on-line or open any paper on any day and you will see headlines saying things like:

“Property prices increasing, recovery has begun” right next to “Worse yet to come in property sector as more developers fail”.

There are a million variations on the theme but you get my drift I’m sure.

So usually the media talk things up when they’re up and talk things down when they’re down.  After all they are in business to sell advertising, not report news, so they generally tap into current market sentiment and report around that.  People like sad news when they’re sad and happy news when they’re happy so following suit sells more.

So right now the media globally is basically inexperienced and unprepared for our current really serious situation.  Things are so bad that they risk losing market share if they report bad news and things are so obviously bad that they will get laughed at if they take a positive stance.  So they do what any good spin doctor would do, report both sides simultaneously and hope nobody notices the total inconsistency.

Now I’m sounding more cynical than I mean to and I’m not picking on journo’s at all.  I am simply wanting to highlight to us all that we can’t get our information from the media in the current climate.

What is happening in the property market?? The answer is not ‘Who knows?”  The answer is “Nobody Knows!”

Everybody is crystal ball gazing, (aka guessing), so on the law of averages some people will end up being right, because they guessed the right way.

In New Zealand we have one researcher named Kieran Trass who is pretty accurate, however this is because he has invested a small fortune in systems and analysis tools to try and take historical trends and forecast them forward.  It is his life’s work and the results are fabulous.

Everybody else just guesses based on their experience and opinion.   So where do you go to get your information?  Well the short answer is nowhere.  What I mean is you need to set some goals and rules around your property investing that don’t depend on how the market overall is performing.  For example a cash flow positive property that isn’t overly geared will “perform” regardless of the market.

The long answer however is that we need to accept responsibility for our lives and our investing and do some homework ourselves.  I accept that every bad deal I’ve bought was my fault/responsibility.  I try and do more and more research on an area and follow the longer term market trends to position myself to maximise the likelihood of a good outcome.  To achieve this I….

1.  Ignore all media statements about property, especially those written by Real Estate principals.

2.  Talk regularly to my property managers, mortgage broker and my “trusted” real estate agents that I have an ongoing relationship with.

3.  Keep on top of local news in the areas where I already have or want to buy property so that I know about new schools, bad schools, burglary prone streets etc.

4.  Check the district plan regularly with the local councils so I know of any major roading or utility projects and changes that may make an area more or less desirable.

In other words I am building up a mind map if you like of the area so that I “know” it.  I can’t accurately predict the capital growth of that area or the time frame, nobody can, but I do now have a great picture of how likely I am to get and keep good tenants and whether the area has a high probability of growth in the medium to long term.

This is “how to” equip yourself to plan for your success and deal with the media’s split personality problem.

Stay Inspired and Stay Safe ~ Dean Letfus @ www.MassiveAction.tv

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