Smart and fast: using your head to invest wisely

Not too long ago, I had a client who couldn’t seem to decide whether he wanted to buy a potential investment. I’d supplied all the data which showed this home had great potential, however, something was stopping him from pushing go on the purchase.

What I discovered was that despite his best effort, the client couldn’t get past the emotion of buying. He seemed unable to concentrate on the hard and fast numbers and was looking at the property with his heart, not his head.

As it turns out, this asset was in his home state, so before committing to a purchase, he decided to make a four-hour round journey to see it. I said, “Of course, you can go inspect the property, but you do risk losing this one because it has excellent metrics and won’t stick around for long.”

In this instance, he, fortunately, secured the property by the skin of his teeth. We had another two clients coming through who were ideal fits for this investment and either one of them would have bought in a heartbeat.

However, his actions told me a lot about his property-investing mindset. While I don’t begrudge anyone doing an inspection, they are a pointless exercise if the figures already stand up to financial scrutiny. If this client had spent two hours familiarising himself with the information rather than wasting the time driving to and from the house, he would have saved himself a lot of grief.

Looking at the home was never going to change the fact that he was purchasing for a very fair price based on comparable data. It was not going to alter the rental return which showed a generous yield compared to other leases.

I think there are some lessons we can learn from this event.

Use your head

Investing is about rental return and capital gains. It’s about servicing your financing. When investing, you need to know what’s achievable on the spreadsheet and how you go about maximising your results.

These figures are based on hard numbers founded in comprehensive research. Any decisions, even about likely long-term investment performance, need to be forged in reliable information.

One big thing an investment is NOT about is whether you personally like the home. Your balance sheet doesn’t care if you appreciate the colour scheme or desire the layout. It makes not a lick of difference if you love or hate the suburb.

When buying a property, use your head to make the big calls and save your heart for those you love and appreciate.

Move fast

Making quick decisions when you buy doesn’t equate to acting recklessly; it means the very opposite.

With enough available data, it becomes obvious whether it’s worth buying a particular property or not. Being able to come to terms with the strength of an opportunity quickly allows you to profit while others flounder.

So, how do you make haste when looking to secure the right investment property? Simple… know your numbers.

Smart investors spend their time getting their heads around all the relevant figures. It can take hours to get right across the pertinent information… but the rewards are worthwhile. Once you’ve been immersed in the data, you will be able to tell almost instantly whether a deal that’s presented to you is a good one or not.

Best of all, those who act fast get more time in the market to enjoy greater returns. I’ve seen investors hesitate for months, even years, in making a buying decision. As a result, most missed out on tens of thousands of dollars in capital gains and rental income.

Confidence is king

Trusting your data allows you to proceed with confidence throughout the investing journey.

Too many times we hear about investors who make the leap and then start to sweat the small stuff. Being confident means you can proceed with ease, even during market turmoil.

So how do you achieve this?

Firstly, it’s about defining your goals, understanding your resources, and mapping out a plan. Being confident includes allowing for buffers and contingencies. You need to stress test your figures for when interest rates rise, or there’s an extended period of vacancy between leases.

Confidence keeps you leveled and focused, so you can act from a position of strength when building your portfolio.

Savvy investors know that relying on solid data results in great outcomes. Of course, having the ability to analyse the information takes skill and experience. This is where your trusted property advisor comes in. Trusting the talents of a qualified professional will help you achieve fantastic things from your property journey.

Always review any property investment strategy, location research, and investment analysis data with a professional, QPIA (PIPA Member) qualified & accredited ASPIRE Property Advisor Network Advisor. Never rely on glossy sales brochures or property marketing information, ensuring a property is right for your strategy. Property Investing is about BUYING a property that matches your goals and aligns with your investment strategy. Never be SOLD an investment, know your numbers!

Visit?www.aspirenetwork.com.au?or call our office to be connected with an accredited and independent Property Investment Advisor on?1300 710 933.