By Cam McLellan
I was a heavy metal rock star in the 1980s, or at least that’s what I wanted to be back then. Like business, I find music creative. It’s my outlet. And while my band days are long gone and my hair is much shorter, I still play regularly. Nowadays my captive audience are the kids and my set list consists mostly of wiggles songs.
But what do guitars have to do with property investment?
Emotion, that’s what.
I buy guitars and sometimes I get emotional and I’ll pay too much for them. Why? Because I really want that particular guitar so I’m happy to pay whatever I have to. I don’t avoid telling my wife what I pay. I just mumble sometimes when she asks.
You Need to Keep Emotion Out of Investments
With an investment property, you’re never going to live in it, so you can let go of any emotional connection associated with the purchase.
Conduct your due diligence on the market and area. Stick to your investment criteria and ensure that everything measures up. Then buy.
Remember there are lots of houses out there to buy or build so if you don’t find one that ticks all the boxes right away, move on.
Never look at an investment property as if you might one day live in it. This can lead to a huge mistake.
Most investors buy a property within a 10km radius of their home. Actually, most buy in their own postcode. Why? Because they figure they know the area well so just pop down to the local real estate agent.
Hey did you notice that word ‘local’? If you go to your local agency to find a property without doing any research first, you are cutting out 99% of the country’s potential investments.
Don’t get me wrong. I know agents who are real assets when it comes to investing. But let’s not kid ourselves. Agents will always sell to your emotions because it’s the easiest way to make a sale.
If you live in the area, you will hear comments like:
- It’s a lovely safe area.
- Doesn’t it feel homely?
- You’ll most likely get nice tenants
- You can drive past the house and keep an eye on it.
Don’t fall for any of this jargon. These are emotional hooks. Instead, stick to thorough research, which will inform you that your purchase is a solid investment that meets your strategic criteria.
It’s important to follow a set system when investing. Get to know which stage of the cycle each city market is at. Determine an area which has a good balance of growth and yield. Then select the optimum size and quality property for that area.
My wife Felicity and I own a number of houses that we’ve never seen in person. By following a system that provides checks and measures it gives me control during the due diligence process. This means I can have confidence in my investment choice.
As I mentioned earlier, I pay too much when I get emotional. Everyone does. But if you take the emotion out of the decision, you’ll be happy to walk away. And that means you’ll always get the best deal.
“The deal of a lifetime comes up every week,” my dad told me when I was young. And time and again, he’s been proved right.
When you have a property investing process to follow, you can be sure of your investment decision. This then allows you to take emotion out of the equation.
Remember that if you’re struggling to remove emotion from your property investing or you’re just looking for some friendly advice, OpenCorp can help. You can get in touch with our property or funds experts here.