Important Property Investment Lessons

The bamboo tree is truly impressive! At over 90 feet of towering greenery, it’s hard to imagine that it gains most of its height in less than 6 weeks, but takes 5 years to show a shoot.

It’s planted, watered, fertilised, and weeded like any other plant throughout its first year. Within those 365 days, nothing grows. In year two, you persist with the same activities. You water, fertilise, and weed, with only hope, praying that nothing was wrong with the seedlings. And again, zilch! Not even a bit of green to show for your effort.

Year three and four go by in a similar fashion. Any normal person would call it quits at this point and plant something else in place of the bamboo, but those who want it badly trudge on. They continue to water with the same passion that they started with.

Finally, in the fifth year the miracle happens. The bamboo shoots out of the ground at an alarming rate. It grows to 90 feet in just 30 days! And suddenly you have this forest of ridiculously tall plants. Everyone else is left wondering how this can be.

When you take a closer look at the practice of growing bamboo, you find that it shares a set of salient principles with property investment. These two fields have more in common than you can imagine, and one lends more to the other than you can concede. There are a number of property investment lessons that we can learn from growing bamboo. If you want to know what they are, keep reading.


The Planting Process

The initial growth of bamboo is not visible. The farmer continuously waters and weeds bare ground while not much as a shoot shows up. He is patient because he is aware of what good lays ahead. He takes his chances until after five years when he’s hard work starts to bear fruit, and he gains a wholesome.

Property investing is in the same vein. One ought to have the passion to hold an investment property until the market is in their favour. The market is not likely to move at all in the beginning, and this means you’ll experience a stagnation much like that experienced by the bamboo farmer.  But you wait it out.


Consistency is Key

Without watering and weeding consistently, the bamboo will die in the ground. Property loses value, as well, if it’s not tended to regularly.

Usually, there are costs that one incurs as a result of holding a property for an extended period of time. They include repair and maintenance costs and special levies. While the rents are low, you have to support these costs. At some point, rent received rises higher, and the property is able for them, but it is important that you are able to support these costs until such a time.

In essence, you have to keep “watering the plant” i.e. nurturing the investment. Take care of any outstanding debts on the house, pay the necessary fees and taxes regularly, remodel if you have to, but most of all, be disciplined about the whole process.


Have faith that your ‘Bamboo Tree’ will grow

While property investment is relatively a stable form of investment, you’ll waver and doubt your choice of investment every few years, especially when things are not going your way. You’ll question your investment choice, telling yourself that you are a fool for believing that you could cut it in this pond.

In the years after planting the bamboo, you feel the same way. When you’ve been watering and weeding the ground every other day, and nothing’s been happening, you get tempted to throw in the towel. The only thing that keeps you going is the fact that you’ve already spent a lot of time and money on this. After four years of toil towards this, it’s wise to give it one more year, with faith that the bamboo will grow. This kind of faith is equally important in the property market.

Over long periods of time, say 7-10 years, the values of property grow. But in the short run, it feels like they are stagnating or growing very slowly. You’ll feel like the wait is not worth it. You’re tempted to sell earlier than you set out. But you should not do this. If you did the due-diligence, the market will surely turn in your favour sooner than later. Your dedication, passion and faith will eventually be rewarded.

It’s an exercise of endurance and patience; investment, that is.  Once you’re able to hold a property for 5 years, servicing the outstanding loan becomes an automatic routine. There’s only thing that keeps the fire in you ablaze and that’s the faith that you’ll see better yields and positive turnover from the asset someday. Bamboo seeds may not show anything in the first 4 years, but the gardener need only continue to water them every day without failure. It’s only after 5 years that the bamboo starts growing rapidly. The same happens with property. In the first years, there could be no progress, but after years, the price is likely to double or even triple.


Establish a Strong Base to Grow From

Do you know what’s really happening in the ground before the bamboo comes out? Is it just lying dormant for four years? No, not at all! The bamboo is growing all along. In the entire length of the time, the bamboo is creating a vast network of powerful roots that can carry the enormous plant.

The important lesson here is to establish a reasonable base of equity from which to spring to grow a portfolio. In a period of five years, you should have gained some equity on your investment; enough to give you an opportunity to buy the second and third investment. If you have enough equity from your first investments, you’ll get it easy with the lenders. It’ll be easier to get loans at faster and cheaper rates to finance other investment opportunities.