A common property investment mistake
In the world of property investment, it’s extremely common for first-time investors to lead with their emotions. We see people relying on their emotions when making decisions, planning their strategy, and searching for property. We don’t blame them, it’s a natural instinct. After all, we all make decisions in life based heavily on emotion – from where we want to live, to who we want to settle down with, to whether we’re going to treat ourselves to a take away. But when it comes to property investment, there are plenty of reasons why you should take emotion out of the process to ensure you maximise your chances for a successful investment journey.
Investing in the right location
This is one of the most common instances where we see people leading with their emotions. When considering investing in property, most people will look around their own suburb, begin to wonder how they could make some money off the property market, and start searching for houses for sale within a few miles of their own home. They want to be able to drive past their property every now and then, check how things and going, and be on hand if there are any problems. But this isn’t necessarily the best strategy – there’s a whole city, state, and country of properties out there, and the chances of you living in the midst of the new high growth suburb is very slim.
In this case, a buyer’s instinct to want a property close to home should be replaced with in-depth property market analysis in order to determine the area that will give you the best chance of finding great tenants, and the best chance of your investment making the maximum amount of money over time. If you’re worried about the management aspect with a property further afield, read up about what a property manager can do for you.
Getting the timing right
Timing is another key part of property investment – this applies for the market and for you as an investor. Firstly, before you make any commitments to your investment, it’s vital that you assess your own finances. Many investors have been dreaming about getting their foot on the property ladder for years; others might have spotted an irresistible opportunity. Either way, you shouldn’t be rushing in just because the bank tells you they will lend you the cash. The first step you should be taking is a deep look into your finances to determine whether you can afford the investment – that’s not the bank telling you how much you could borrow, but really some insights into how much you should borrow. To do this, we recommend seeing an independent broker who will look at your finances in the round. Reventon offers this service for free, to support you in making your important investment decisions and to ensure you don’t over-leverage.
Secondly, you need to ensure the market is in the right place. We talk a lot about the property market cycle and ensuring that you buy not only in the right place, but at the right time. That means not following the news headlines for the next hot property suburb, but to conduct meaningful analysis of the property market, looking at areas of high investment, checking the infrastructure, and looking at recent property price trends. To truly analyse the property market in this way, it’s recommended you get some support from people who have experience and whose recommendations you can trust.
Divert your emotion
Now, this isn’t to say that property investing should be a totally emotionless journey. There are plenty of opportunities along the way to channel your emotions. However, rather than your emotions playing a part in your key investment decisions, you can place your emotions into your ambition to be a property investor. That means, when you’re saving for your deposit, putting your enthusiasm into your saving efforts. If you’re considering investing in your second property, it means putting your time into financial planning. If you’re nearing retirement, it means making investment decisions to ensure your family have a secure future.
In many of these decisions, there is room for your emotions to drive you. It’s important to be passionate about your dream of property investment – but it’s equally important to ensure that passion doesn’t cloud your judgement when it comes to practical steps.
Get professional investment support
To ensure you’re making the best logical decisions for you, consider getting a professional on your side. A professional will be able to guide you on your journey, and most importantly advise you based on facts, insights, and expertise. Reventon has been supporting people in this way for years, helping thousands of Australians to realise their property investment dream with great success. What’s more, you can get a free advice session to ask your questions and get expert insights into the best route for you. Book your free consultation today.