One of most common mistakes made by property investors is becoming too emotionally involved in a property. To succeed, investors must shift their mindset from that of buying a home that they and their family will live in to buying an investment property that will create long-term wealth.
How can you change your mindset? Here are four things to consider.
Property investment is a financial decision
As a property investor, your goal is to make money from your investment; buying it is, essentially, a business decision. In order to make money you need to find a property that has the potential for good rental return in the short term and capital growth over the long term. To achieve this you must be able to identify a good investment.
To be investment worthy the property you choose must be in a good condition, in a good area and priced well. You must also be certain that the property will attract and keep good tenants. If you are unsure about the possible financial merits of a property it is important to consult a finance expert before you get too involved in the process.
Remember, you are not buying the family home
When you are evaluating potential properties it’s important to keep in mind that you won’t be living in it. Your investment property needn’t be a carbon copy of your family home and you certainly shouldn’t look upon it with any sentimentality.
Experts suggest that you avoid purchasing an investment property in the same suburb you live in or a suburb you’d like to move or retire to because this could blind you to the ‘true’ value of the property. Instead, choose a suitable property by doing some research. Find out where there is strong demand for rental homes and take a look at the demographic of the suburb.
The home you choose needn’t have all the modern conveniences you may have in your own home. If it is priced well, and it is well presented and functional, it will attract the right kind of renters.
Objectivity is the key – say no to emotion
It’s important to enter into any property investment scenario objectively. With the goal being to make money over the long term, it is important to strip away any emotion. Emotion can lead you to make rash decisions and costly mistakes, especially if you’re considering going over your planned budget to buy a property.
If a vendor can sense that you’ve fallen in love with their home, they will use your emotions against you to whittle down your bargaining power. This could lead you to overpaying for a property, which, in turn, will hurt your return on investment.
Be prepared to walk away from a deal.
Hire a property manager
One sure-fire way to change your thinking about your investment property is to hire a property manager.
A property manager will offer advice and guidance about positioning your property for success in the rental market. They will find you tenants who will pay the best possible price. Your property manager will collect rent on your behalf and take care of the day-to-day management issues that can crop up. Perhaps more importantly, a property manager is a buffer between you and your tenants, and their main goal is to ensure that your property makes money.
Investing in property is all about making smart financial decisions that will pay off in the long run. Would you like to learn more about how property investing can work for you? Have a look at our Seminars page to see when our experts will be in your city.