Buying real estate is no doubt a confusing emotional roller coaster that truly tests even the calmest investor.
You just have to look at the recent spike in prices in Sydney and Melbourne to see how much emotion has ruled the market. Buyers have piled in as everyone else is buying and are pushing prices even higher. On the other side of the spectrum, people are staying away in droves from areas like Perth due to low market activity.
“The marketplace is made up of people and they tend to respond to sentiment,” . “The moment you let sentiment enter your thought process when buying investment property, you spoil the deal. Don’t taint the art of buying for investment with your own personal emotions and excitement.”
This means you need to be poised under pressure and buy an investment property based on the numbers. If the deal stacks up, then it should be considered. What that means is the property has a good rent, it’s in a good suburb, and it’s a good time to buy, which is when the market is soft.
“Your only thought, when considering a property, should be how much profit can you make from this property or how will it perform over the short, medium and long term. It’s not about how it makes you feel,” says Saggers.
To help you avoid losses, we’ve enlisted the country’s leading experts to give you their top tips.
14 Emotional Pitfalls to avoid
1. Paying too much for property instead of being patient
Paying too much for property is never smart. Unfortunately, as the frenzy happens, people tend to overcapitalise and borrow more than they should, sinking more money and debt into a black hole. Paying too much is an easy trap to fall into in a bull real estate market.
An investor is like a farmer, in the sense that you can only reap what you sow. You won’t see results immediately when searching for property if you want to underpay, not overpay. It takes time to ﬁnd a good property deal, and you need patience, which is a rare skill in the modern world. Patience is a small price to pay for what you will receive.