Selecting IP's is it just a numbers game ?

Hi All,

On Somersoft there was a few known investors who have not come to PC, and there are some that have, that used to say it is all just a numbers game to them.

While the numbers, or rather, the money that will be returned at some stage if obviously important, how much do you focus on other factors ?

I am just curious how many think just in numbers v those that think about many emotional components as well.

 

I'm from Somersoft and said it was a numbers game back then and still think the same now.

 

I'm from SS, the significance of numbers only gets stronger for me. Has to be numbers first, if Ihave 2 or more similar options then I might consider emotions. If I have emotional attraction to a property others may also. It's secondary though always. Investment is to make money, no?

 

I think at the core it is always about the numbers, unless you are a hobby investor that is.
Secondly it is about having a well located and desirable property that can be held for a long period of time.

 

Joined Somersoft quite early on about 2002.
Never really paid attention to the numbers or statistics at all.
I quite enjoy the physical aspect of property.
It more about feel than detailed analysis for me.
So far so good.

 

To each their own. I joined SS late. Nothing wrong with a little emotion, it allows you to see it through a tenants eyes. BUT don't let the emotion overtake the need for the numbers to work. The emotion is what makes it fun. If it's purely a numbers game, for me that is a rather sterile approach. All about the money. And there's nothing wrong with that. We're all in it for the money at the end of the day, but there's nothing wrong with having a little fun and enjoying the journey either.

 

I think there has to be degrees of emotion, so I suppose it depends on what you think is emotional.

A bad emotion would be, I really love this house, love the area, I do not care that it returns 3% and no CG above 3% in last decade, I am going to buy this as an IP.

But I wonder how it works out if it is only numbers to someone, would they not end up with a portfolio of ex housing, or half of Moree, for example ?

 

It's numbers. Keep emotions right away from it.

I keep my emotions for Friday night at the local when Shaz struts in. And if she enters with Davo then the emotions reach boiling point really quick. Quicker than an over heat dash warning light on a VN with a blown head gasket lol.

 

Sometimes it's not about the numbers, but the potential.

We have a commercial property. At the time of purchase, numbers did not work as it was housing at the rear of a tiny shopfront. No comparables in the area as it was mainly residential (but commercial zoning) and to be honest looks slummy.

What we knew ( from having good relationship with RE agents ) were a couple of places close by (vacant land) being snapped up for long term leases by a 7-11 and KFC. We did not know the rent they paid, but knew that they were committed enough to do a construction on the premises. That was the basis of our (mainly my husband's) decision and it has paid off in CG.

 

Do VN's have the audible alarm as well ? I am concerned you may do more damage if you don't see the warning as you drive down the street facing the person your hitting in the passenger seat.......had one in front of me the other day, was wondering why they were going so slow and all over the place, was that you ?

 

I think of that as a secondary location play that will pay off in the future but gives you best entry as the current price does not reflect the future potential.

In other words, you sacrificed current numbers for future numbers.

 

I consider it a numbers game.

 

Emotion plays a part in all of my buys, I cant help it. When selling I focus on the money and emotions are out the window, was not always the case years ago

But as much as numbers do matter, its also the market that I am playing in that is more important to me. For example I would not be touching Perth today regardless - whether the numbers were attractive because its a market that is likely to continue to fall so the numbers today are meaningless.

 

I guess if depends if you're playing for cash flow of capital growth.
We've never played the property game for cash flow, as we always had surplus in the past decade, so accumulating for CG was the aim for us.
Decisions were based more on fundamental basics feeling right rather than anything technical or statistical.

 

Numbers are not the end all and be all.

I have a client who recently purchased a stratum within a strata plan and on paper the numbers are fantastic. In reality, its a dog breakfast and every time one issue is fixed another expensive one pops up.

There were examples on SS where people where purchasing ex housing commissions in regional areas bragging about their finds and how good the returns where. Same properties now cant even get an agent to have a look them let alone a tenant to lease them.

Looking at the financials can only get you so far and should be used as guide. Sometimes you should pay attention to that feeling that in your gut.

 

IMO emotion should always be considered. Not necessarily for the investor but for tenant appeal and most of all, appealing to the emotions of the next purchaser in your exit strategy.

 

Any form of investment is "numbers" ... including women

 

I put it to you, that women in a hypothetical comparison to property cost more to hold than investment property.

Example off the top of my head.
Bloke i know just got divorced at age 40.
Lost the entire family home to ex wife and 50% of his super.

That's worse than a GFC imo.
It's not just paper loss, it's actual F ing, loss.

 

Buying a IP is 100% not about just the numbers... its also about vision and taking a risk.
I have bought property where numbers didn't look good but then the area really picked up in a few years and made a cracking return.