Investing in property should be a numbers game, but far too often people get emotionally involved – and that’s when money is lost.
If you take the emotion out of buying property, however, you can enjoy your property profits well into retirement!
If you invest in real estate – or you’re thinking about it – then you should know the golden rule: never get emotionally involved.
Many people confuse the process of buying an investment property with the process of buying their own home. As such, they view investment properties through the same lens that they use when searching for their own home.
They fall in love with the top-of-the-line kitchen.
They admire the beautiful open-plan lounge room that leads out on to the patio.
They imagine themselves reading a book on the balcony in the afternoon sun.
But the fact is, none of that matters.
When you’re investing in property, you’re buying an asset – not a home.
Your asset will provide accommodation to tenants, so you need to look out for features that appeal to renters, not to home owners. There is a big distinction.
| Tenants want: | Owners want: |
| Convenience | Comfort |
| Low-maintenance | Personal touch |
| Affordable | High quality |
When you buy based on emotions or impulse, it can end up costing you tens or even hundreds of thousands of dollars, if you get it wrong – not to mention all of the time, effort and headaches.
To be a successful in the property game, you’re best off treating your investment endeavours as a business.
PRODUCT: Your investment property is your “product”, as it’s an income-producing asset.
INCOME: The rental returns you receive becomes your “income”.
EXPENSES: The costs of owing your investment, such as mortgage interest, insurance and council rates, are your “expenses”.
PROFIT: The capital growth that your property experiences, along with any net annual returns (income – expenses), becomes your “profit”.
When viewed in this light, it becomes easier to evaluate potential property purchases based on facts and figures, not on your personal feelings or emotional reactions.
If in doubt, it’s always a good idea to seek out impartial advice from other like-minded property investors or industry experts.
