This month, our CEO, Joseph Chou, shares his insights into why you need to keep the faith when it comes to your investments – not just in terms of property, but also in business and life as a whole.
Stop believing, start having faith
A common question I put to my colleagues and customers is: what’s the difference between ‘faith’ and ‘belief’?
The old saying “seeing is believing” is something that holds true for many. For example, people have a lot of belief in the still-relatively-hot Sydney property market – because they’ve seen for themselves the performance of the market in the last few years. Yet, those same ‘believers’ will quickly change their minds as soon as the market eases, and be quick to jump ship.
By contrast, faith is not based on what you can see in the moment. Faith comes from knowledge, experience and determination. Faith is Bill Gates’ refusal to sign an exclusive deal with IBM back in the early 1980s – knowing that one day, everybody would have a personal computer, and every PC – regardless of the brand – would be equipped with Windows.
The reality is that everyone has dreams and many work very hard to achieve those dreams. But if you don’t have faith; if you don’t have the long-term vision and commitment that goes hand-in-hand with faith, then you’re much less likely to succeed.
In business, you’ll find plenty of examples of investors who may have stopped believing in a company’s vision. Of Jack Ma’s vision for Alibaba, or Steve Jobs and Apple in the early years, for example. If they’d held on through temporary setbacks and challenges, even a 0.1% stake of Alibaba stock would now be worth USD$450 million.
Should you have faith in Australian property?
I’ve been in the property investment industry for close to 20 years now, and in that time, the market has been through many cycles, interest rates have fluctuated, the economy has had its ups and downs. There’s no doubt that investors experience a multitude of challenges and difficulties. However, successful investors never lose sight of the long-term potential of the property market in Australia. And this is crucial.
A few years ago, I met an investor who had bought a 2-bedroom apartment off-the-plan in Victoria Park, Zetland, located about 5km from the Sydney CBD. In 2005, when it came time to settle the property, the Sydney property market was flat, and after noticing that the developer had to discount prices to be able to sell the remaining apartments in the building, this investor thought he’d made a terrible decision. He decided to sell his own apartment soon afterwards, and sold below his purchase price. He also vowed never to trust a developer or agent again, or even to invest in property ever again.
Interestingly, I purchased 5 apartments in the same building. I bought a one-bdrm apartment for $440,000, two 2-bdrm apartments with a carpark for $520,000 each, as well as two 3-bdrm apartments with 2 carparks for $660,000. The price wasn’t cheap for the time, and the promised shopping centre adjacent to the development was yet to eventuate due to the flat housing market. However, I made these investments, because I had faith in the long-term potential for the area – so close to the CBD, close to the airport – and I knew the shopping centre would be built. For me these investments were part of my long-term wealth building strategy. So, while others chose to give up, I chose to stick with it.
In 2009, Meriton – a mid-range developer – was selling apartments in its Zetland development. At that time, a 1-bdrm with no parking was starting at $550,000; 2-bdrm apartments were $650,000 and 3-bdrms were $900,000+.
Today, the shopping centre (East Village) is open for business and it’s about a 1 minute walk from my apartment building. But today’s property prices are very different from what I paid: 1 bedders start from $700,000, 2-bdrms from $915,000 and 3-bdrms from $1.3 million.
Those who pulled out of the market early on, obviously missed out on the substantial longer-term gains. And by the time they started believing again, prices had gone up and they had to pay a premium to get back into the market.
Faith in business
In my experience, the same attitude is just as important in business. When I founded Ironfish in 2006, the market was flat, there were many non-believers – including former business partners I’d worked with in the property investment industry – people who’d experienced first-hand the benefits of property investment and had much success in previous years when the market cycle was at a peak.
Whilst my former business partners decided not to join me at Ironfish, at the same time, I approached Ellen Bian (now the Managing Director of Ironfish Melbourne). Despite a slow market, Ellen chose to have faith in me and my vision, as well as the long-term potential for real estate in Australia. And by keeping the faith and working together over the last 11 years along with our other partners at the time: Susanne Anderson, Grant Ryan, Damon Nagel, Linda Lu, Lanny Xu, Joanne Chen, Jason Jin and Helen Qin among others, we’ve built Ironfish into one of the largest, if not the largest pre-retail property investment services companies in Australia. Ellen and our team have all grown their own personal property portfolios in that time as well, and have enjoyed significant growth and success.
At Ironfish, we all continue to have faith in our united vision to bring financial security and wellbeing into the reach of thousands of Australian households. We have an unwavering commitment to be a company that is loved by our customers, admired by our peers and valued by our staff.
So, if you feel like you’re at an impasse in life, business or in your investment strategies – keep the faith. You may well have a stake in the next Microsoft, Alibaba or Facebook – even 0.1% can be more than enough!
Joseph Chou is the CEO and Founder of Ironfish, a prolific property investor, and a passionate educator in financial wellbeing, entrepreneurship and personal development. Each month, he shares his personal insights through our Ironfish blog. He also frequently travels around the country speaking at a range of property investment seminars and business events. To book your place at his next speaking engagement, please see our seminars page.