Buy The Property You Need… Not The One You Want
Dilleen Property Group 2023
Do you have a dream property that you really want to purchase someday? Are you influenced to purchase investment properties that share similar features to your dream property?
If you answer yes to the previous questions, you may have fallen into the trap of emotional investing.
Property investing is about choosing properties with the right figures to create a stable passive income. It is crucial that you only buy the properties you need, to grow your portfolio, not the ones you want to live in yourself.
Emotional Investing:
Emotional investing is a common mistake made by many property investors where they purchase properties based on instinct rather than statistical or technical research.
For example, some investors only want to purchase Houses as investment properties because they like the fact that Houses have more land than other property types and don’t have to pay body corporate/strata fees, unlike property types such as Townhouses and Units.
Due to the investor’s strong preference for Houses in this scenario, they will limit their variety of properties to invest in and their emotional purchases may result in them becoming stuck with finance in the future.
Analysis Paralysis:
In contrast, some investors are very focused on finding the right property to invest in, this means they are researching too much into the minor details of each property. This may include wanting to know whether or not the property is close to the train station or if it's located on a main road or what the size of the backyard is. Not only is this time-consuming, it can also result in the investor being stuck and not progressing forward in their property portfolio.
Golden Criteria:
In order to make fast progress in building your property portfolio, your property should be:
Purchased Under Market Value - This means the property has been picked up below comparable sales, this can be through a bank repossession, urgent price reduction or because it is an off-market property.
Located in a Metro Location - Properties should be within an hour’s radius of the CBD and regional areas shouldn’t be a priority.
Having a High Rental Yield - The property should have a 5%-8% rental yield to be able to support itself in the long term.
Conclusion
It is vital to have a balance between making decisions purely through instincts and becoming too analytical about the minor details of your property. Falling into either of these categories can prevent you from progressing forward in your property portfolio as you will find yourself stuck with finance or not knowing which properties to buy. Property investing is about purchasing the properties with the right numbers to help quickly build up your property portfolio. If you require assistance building your property portfolio or have an inquiry, feel free to contact us here to learn more about our services and investment strategy.
Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
