There isn’t a successful investor alive who’s never made a mistake, and Scott O’Neill of Rethink Investing is no exception. That’s a normal part of investing – no one is infallible. The problem, O’Neill explains, is when people think that a mistake means the investment journey is over.
“When people come to us for investing advice, we need to be more open about our own mistakes,” says O’Neill. “We learn more from our mistakes than our successes, so it’s important to discuss how they made us better investors in the process.”
O’Neill points to his one of his own decisions as an example. A few years ago he purchased a site in Adelaide which he saw as a candidate for development – not something he does as part of his regular strategy. It was part of a larger development, and a handful of properties had already been built. O’Neill says he was looking for “quick gain” and in the process was “getting ahead of myself”.
“I saw it had potential for subdivision, but I bought at the peak of the market, overpaid and ended up with a bad yield because of it,” says O’Neill. “The market was just too quiet. I should have stuck to the strategy I knew would work – it wasn’t a total disaster, but it certainly could have been better.”
“Investment is a long-term game, and you don’t necessarily need to pull the plug just because an issue has emerged”
The primary problem, as O’Neill sees it, is that he was too emotionally fixated on the idea of undertaking a development, rather than researching properly.
“It’s hard to let that go,” O’Neill says. “It’s a mistake that we see lots of investors making. They get too attached and hold on to a property that either isn’t profitable enough or is costing them money. Sometimes you need to just take the loss.”
O’Neill stresses that it’s possible to turn a situation like this into a positive – an object lesson in what not to do in the future. He also recommends considering how funds might best be used, and how well retaining such a property will actually further your wealth-building goals.
“Could the money be used better elsewhere?” he asks. “Maybe you have other investments that could be funded via offloading it, or you could potentially look at tax write-offs for the loss on the property.”
Additionally, O’Neill cautions that you won’t necessarily need to pull out at the first sign of “trouble”.
“Investment is a long-term game, and you don’t necessarily need to pull the plug just because an issue has emerged,” he says. “People sometimes have situations like a bad tenant and want to offload as a knee-jerk reaction. But it’s a multi-year or multi-decade process, not something that should be ruined by a couple of bad months.”
Still, O’Neill always recommends speaking to a professional.
“If you think things are going wrong, go speak to an advisor,” he says. “Getting personalised advice for your particular situation is crucial. It’s easy to get caught up in ego-driven decisions, and having a more neutral third party can really help counteract that.”
About Scott O'Neill
Scott O’Neill is the founder and director of Rethink Investing, a BRW Fast 100 property investing company specialising in finding rare positively geared properties all around Australia (commercial and residential).
Scott is an experienced and active investor who was able to retire from his day job at the age of 28. With a current portfolio of 32 properties worth $20m, Scott is one of the most successful young property investors in Australia. He has a passion for all aspects of property, especially helping others find great deals. Because of this passion he founded Rethink Investing
Ph. 1300 965 551
www.rethinkinvesting.com.au
