The problem with the long-held property ownership dreams of many Aussies is emotion. We dream about becoming homeowners from such an early age, which means there are plenty of emotions attached to achieving our goal. When it comes to property investment, though, emotion should be left out of the equation, which can be tricky for some people.
Experienced investors understand that the best investment properties are the ones that are going to provide solid cash flow and capital growth over time. They don’t care where it is or whether they themselves would want to live in it. That’s because they see it as an income- and capital-growth producing asset that will improve their financial futures. It doesn’t matter to them what suburb, city, or state it is located in – as long as the numbers add up and the fundamentals are there to support future price growth and regular tenant demand.
Many investors have also never even set foot inside their properties because they are unemotional about the bricks and mortar side of their investment strategy. Often, they also live in a different part of the state or the nation, so doing a drive by isn’t something that can easily happen anyway.
When presented with property investment opportunities they make unemotional decisions based purely on metrics such as the buy-in price, the potential cash flow from rent, as well as the economic fundamentals of its location which will help to underpin price growth in the years ahead. Of course, experienced investors can more easily do this because they already have runs on the board so to speak. However, even they had to adopt such a mindset at some point during their property investment journey – and it’s always best that it happens at the outset.
Unfortunately, some potential investors miss out on great opportunities during optimal market conditions, like on the Sunshine Coast at present, because they get too emotional about it. Often this is because they have only ever bought their own home before, so it’s not overly surprising that emotions can get the better of them.
But the key to investment success is to push emotion aside to deal with the cold hard facts such as:
- How much does it cost to buy or build?
- What will the cash flow be once it’s rented?
- What are prices likely to do in that location over the medium-term?
Once those questions are answered, then it’s the investors who then diligently move forward with their decision-making – without emotion – who will be the ones who wind up with the crème of the property crop in their portfolios.