Emotional investing is dangerous

Unlike other forms of investment, real estate is unique in that prospective purchasers are more susceptible to becoming emotionally invested in the asset itself.  


In many instances an investor will connect or disconnect with a property as soon as they walk through the front door: the spatial dimensions, the views from the window, the colour scheme and various other features that can potentially cloud their judgment of whether the property is a smart investment prospect. For investors starting out in the field, ‘emotional investing’ can be particularly dangerous.


When a property is being purchased for pure investment purposes there are several factors one should consider, such as:


·         The price of the property, which should typically be at or below market value;

·         Whether the  property has good prospects for strong capital growth or high rental returns;

·         Whether the property is tenant friendly; i.e. in close proximity to amenities such shopping centres, schools and public transport;

·         Whether the potential income from the property is going to be sufficient to meet your needs, commitments and lifestyle.


One of the most exciting aspects of real estate is the unique character that all potential property investments have. However, investing with emphasis on emotion is a dangerous practice that should  be consciously avoided.


Such can be achieved through keeping financial and strategic considerations at the top of your priority list - an approach that should set you in the right direction to making a smart, and potentially lucrative, property investment.


For more information about property investment options in your area, please contact your local CENTURY 21 office.

Posted by Charles Tarbey on 24/07/2012 at 11:26 AM | Categories:


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