Emotion and logic each have a role to play in a decision-making: personal or business. But, if you want to invest successfully in property it’s vital to you have a practical and logical system in place that allows you to make good decisions based on the facts. But beware of ‘analysis paralysis’ says Just Property Group's Paul Stevens, he says "many deals have fallen through from being unable to make a solid decision.
"Overly analytical people will scrutinise a deal beyond what is necessary, which is when analysis paralysis happens. Buying a property for investment is never perfect, but analytical people can have a problem with this. They can often suffer from the fact that real estate involves both give and take. Often they never get into the game as they strangle property with their own reasoning before they even get started."
Below Paul uncovers how to overcome 'analysis paralysis'.
The core symptom of analysis paralysis is the basing of your decisions purely on emotion and the small things that can be changed such as fittings etc., or burying yourself in facts and figures. You might never find the perfect investment, but by bringing yourself back to the reason for seeking an investment you will find a near perfect one.
If you find yourself in this state you need to set out clear goals and objectives and ask why you are wanting to make this investment: is it to be for an owner occupied unit or is it purely for rental purposes. The answer plays an important role in the decision making process and will have an effect on your final decision. If you plan to live in your investment, your emotions will play a pivotal role when purchasing, however if this is an investment property you need to have a completely different mind-set. Your decision will be based on fact, figures and your return on your investment. Base your decision on facts and look at the right figures:
- Is it viable?
- Is it the right price?
- What are the average rental in the area and expected capital growth?
- Are the returns realistic?
- Are the returns what you expect?
- Do the returns make your investment worthwhile?
- Is there sufficient infrastructure in the area you are buying?
- Are there any future plans/extensions for the area?
- Is there a high rental demand in the area?
- What are the expected management and maintenance costs?
- What are the current market trends?
- Does it add to your bank balance or take away?
And finally, don’t over analyse things like tiles, counters etc. although these to make a difference they can be changed over time and should not be something to stall your decision and land up losing out.
Photo courtesy of www.askjoerealtor.com
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