Don't Invest with Emotion

Every IP I've bought has been worth more than my PPOR, by a margin.

 

Hi Chilliblue, given our office is in Brisbane, the easy answer to this question would be that we are recommending clients buy in South East Queensland. It would be quite negligent of us to recommend clients always buy here just because it's where we are based.

We study property markets nationally and currently have 6 locations across Australia (spread across 4 states) that we believe will see better than average capital growth over the next 10-15 years.

Drivers of property markets are a lot more scientific than most people realise. There is more that drives a property market than a new train station, or new cafes.

 

Completely agree!
It should purely be a numbers game when investing. Whether that's the cashflow position or the expected growth based upon key indicators as opposed to "I live here and it's lovely".

I have a few "investor" friends who all own 1 property and all in the same area. Great suburb but all their investments have performed terribly, even in a hot market.

 

Well let's hope they keep those type of stations away from the general population and the vicinity of the cafes...

 

Title says "Don't invest with Emotion".

Of course I agree.

The question is, then, how do you not invest with emotions, or less emotions? Even for the experienced investors at times it can be challenging at certain moments. Even if you stick to 'the numbers', the numbers are still being looked over by an entity (us) of whom naturally are ruled by emotions (btw that's not my opinion, there is much medical and psychological evidence that supports this). Just because your looking at 'the numbers' doesn't miraculously extinguish our emotional responses during the researching, negotiating, buying phases.

In my opinion, you have to directly attack your emotional centres in the body - your brain or the Central Nervous System. Our emotions control our physiological responses which controls our actions and therefore results. That's the very reason why top athletes for example, spend a great deal of time on their psychological conditioning/training as much as on the sport its self. To stay top at their game, they know both parts of their training can not be separated.

 

Thanks Jacque - hadn't had my morning coffee from said cafe!

 

Investing in a location, or a property that you would personally live in (or not investing in one that you would not live in) even if the 'numbers' stack up - means emotions have been involved.

Ultimately the colour of a wall, or a bench top - have absolutely no impact on capital growth, they will affect initial purchase price, but not capital growth. Larger market drivers (economic and industry drivers) will determine demand for accommodation in a particular location.

Regarding your comment about athletes - I agree. But they can't pay someone to do the job for them and take the emotion out of it.

 

[QUOTE="Bryan Loughnan, post: 26156, member: 2236]Investing in a location, or a property that you would personally live in (or not investing in one that you would not live in) even if the 'numbers' stack up - means emotions have been involved.
Of course emotions have been involved. The key is to train our emotional response to work in our favour, rather than against us.


Ultimately the colour of a wall, or a bench top - have absolutely no impact on capital growth, they will affect initial purchase price, but not capital growth.
No disagreement there.

Regarding your comment about athletes - I agree. But they can't pay someone to do the job for them and take the emotion out of it.[/QUOTE]

In my opinion, just because there are certain elements in property investing that we can delegate to other professionals to spearhead, doesn't mean we don't need to have good control and understanding of our own emotions and how they affect our quality of decisions. We are ultimately responsible for our own success, not the professionals. Yes we work together with finance brokers, buyers agents, accountants etc, but they are not responsible for our level of success. Only we are. And the sooner we can control our emotions and use them to our advantage, the better and more successful we will be. Just my opinion here.

 

Try telling that to the developers here

To me, land size is very important in many cases. Different strategies will determine how important land size is or not.

 

Happy to agree to disagree on this one Leo. There is absolutely no evidence that 'land size' impacts capital growth rate.

A house on a 1,000sqm block will (all things being equal) cost more than the house on the 600sqm block next door, but that doesn't mean it will grown in value any quicker....

 

Organic growth of land is only 1 way to get CG and in my opinion is the most simplistic way to gauge CG potential. Having a larger size block in many cases can allow for scope to add value, eg granny flat, subdivision, duplex, etc. making the land itself much more valuable. Take duplex for example. Making 1 into 2 dwellings, then you suddenly have CG growing on two assets, which originally started from 1 block of land.

In my opinion you cant say size has no impact on CG. It can have a significant impact. We will just have to agree to disagree then mate. I respect your opinion