Episode Details

Paul Nugent, the co-owner of Melbourne-based buyer’s agency, Wakelin Property Advisory, sadly passed away recently. I first met Paul back in 2004. Over the past 14+ years, Paul and I have given many presentations, shared a large number of mutual clients and have had numerous conversations and debates about property investment.

Not only was Paul a true gentleman with an encyclopaedic knowledge of the Melbourne property market, he had a fantastic sense of humour (although I never dared to say that to his face). I really enjoyed working with Paul and he'll be sadly missed. As you can imagine, over the past couple of weeks, I've been reflecting on the information and knowledge that Paul passed on to me through conversations and interactions. And this has inspired me to write this blog. I'd like to share with you the three things that Paul Nugent taught me about investing in property.

Paul’s lesson 1: Some properties just take time

As Warren Buffet says, "The stock market is an efficient device that transfers the money from the impatient to the patient." And that's the key ingredient for any robust, long-term investment strategy. That is, time and patience.

However, patience should not be confused with apathy. Of course, it is important to review investment performance and make sure that your assets possess the requisite fundamentals to deliver performance. This will give you the confidence that you have the right assets to help you achieve your financial and lifestyle goals. But, as Kenny Rogers says, you must “know when to hold them and know when to fold them". So, if you do have an impaired property, no amount of patience will make up for a poor-quality asset.

Paul would also often would remind me that some assets just take more time. And it’s patience and having faith that the fundamentals of an asset that will ultimately deliver long-term returns.

This concept is most applicable to entry-level investment grade assets. A lower quality asset (yet still investment grade) tend to take more time to deliver adequate investment returns. Therefore, if you own an entry-level investment grade asset, you will just have to have more patience and let time do its thing. Sometimes, this might mean that you need to hold onto a property for a couple of decades before you're satisfied with its overall return – so consider this when mapping out your plans.

I recall conversing with a very experienced and wealthy property investor and he was telling me about a property that he owned for 10 years. Over the first nine years of ownership, the property did nothing. And just over the last year, the property has more than doubled in value. Time and patience.

Paul’s lesson 2: Ignore all the indicators and just buy when you can afford it

One of the things that Paul used to say regularly is that, "You should invest when your circumstances allow it – not any sooner or later than that"

Put differently, ignore all the media noise (which is persistently negative) and advice from well-meaning family and friends. Over the last 16 years, I've only read one (say, one) article that has advised that now is a great time to buy property. Of course, I've read thousands of articles suggesting that property is no longer a good investment. The current environment is a perfect example of the negativity around property. Changes to negative gearing, falling property prices, tighter credit are possible reasons why you shouldn't invest today.

However, Paul would always advise you to ignore all these things and instead, only focus on what you can control, which is your own personal circumstances. We can't control markets, the media, tax legislation or the banks appetite