Emotions + Investing = Losing money
This is a formula I teach often, and it really is all about that you can’t be making emotional decisions when it comes to choosing what property you are going to buy or what investment you are or are not going to do.
When you buy a property for yourself, you’re looking for something you’ll fall in love with. You want a house that will become a home for you and your family.
Emotion comes into that decision, because you’re buying for yourself.
When you’re buying as an investor however, you are making a business decision. So it becomes about due diligence, numbers and data and about asking ‘does this makes sense from a strategic and financial perspective?’
If you bring your emotions into the decision, you might end up making mistakes that will cost you.
But I want you to notice something very specific in that last sentence…
I said “your emotions.”
It’s true that your emotions play no part in your property investing decisions. However, saying that there’s no room for emotion at all in property investing will mean you are missing a key component of your due diligence process.
Think about what happens when you’re trying to attract tenants to your property. They’re looking for exactly what you wanted when you bought your own house:
A place to call home.
That means emotion is going to play a part in the decisions a tenant makes. They’re looking for aspects of the property that will wow them. And they want to know the location offers all the things they’ll need during their time as your tenant.
If you take all emotions out of property investing, you’re neglecting to account for the role emotion plays with your tenants or with a future purchaser if you choose to sell it.
Think about that the next time you view an investment property. Ask yourself if your target audience will feel emotionally engaged with the property.
Does it offer everything that will cause them to fall in love and become your tenant or future buyer?
If it doesn’t, you need to move onto the next opportunity.
Moral or the story – buy each property with who you could sell it or rent it to in the future in mind
Emotions play a part in investing. Just make sure they play the right part.