At Prospa Property Advisory we see a number of different types of property investors. The type of investor you are can affect the decisions you make throughout the investment process, and ultimately, the kind of returns you can receive. Many would-be property investors lack the correct mindset to be successful with property. So, to make sure you’re not one them, here’s a few investor types that you don’t want to be:
1. The No Fear Investor
This person jumps in at any opportunity that appears glossy on the surface. The No Fear Investor generally has no defined investment strategy other than to emotionally buy in an area that they think will go up in value and do not consider backing the investment decision with research or data. Their aim is generally to try and make money fast and will generally deflect the blame elsewhere when they don’t make money on a property. Luck is their ‘strategy’ – or lack thereof.
2. The Emotional Investor
The Emotional Investor usually has an element of sentiment or a ‘nice’ story attached to the property they buy. They are often investing in property for family reasons (i.e. to house their children) or have an emotional attachment to the property/suburb (i.e. they currently live or grew up in the area). The Emotional Investor’s judgement is often swayed by the pretty photos of a property on a website, and tend to be influenced by ancillary features of the property such as the builder’s prestige reputation and awards. Similarly, they are often eager to inject their own design ‘flare’ into the property which means the purchase becomes more of a personal project, rather than an investment. For this Emotional Investor, the actual numbers of the investment are taken from guesswork.
3. The Over-Capitalising Investor
The Over Capitalising Investor tends to be emotional in their approach to property investment. They do not treat their investment property as a business, rather they put their own standards and expectations on how other people (i.e. their potential tenants) live. This results in the Over Capitalising Investor wasting money on unnecessary improvements to the property, rather than spending their money on items that would lead to increased rent or capital growth. Researching who the potential tenants are for the property and their living requirements could save the Over Capitalising Investor a lot of money.
4. The Tightwad Investor
The Tightwad Investor, as a landlord, spends little or no money on maintenance on their property – very much the polar opposite of the Over Capitalising Investor. A poorly kept property is generally unappealing to tenants and will often mean the property is not achieving optimal capital growth. A low-quality property, due to neglect, also results in a revolving cycle of unhappy tenants which means additional stress and cost finding new tenants.
5. The Over-analysing Investor
The Over-Analysing Investor is someone who thrives on research and information. Now, don’t be fooled – research is the key to any successful investment. However, the Over-Analysing Investor will fail to act because they over-analyse every aspect of the potential deal. This often leads to the Over-Analysing Investor becoming overly cautious in their approach, and ultimately, fear takes over. The Over-Analysing Investor will often be the best-informed person on everything to do with property investment however ‘paralysis by analysis’ becomes their worse enemy. They miss a lot of golden opportunities and take an extremely long time to make a decision – that is, if they ever end up buying an investment property.
What Kind of property Investor Are You?
So, what kind of investor are you? If you find yourself falling into one of these categories, it might be worth taking another look at your goals, and speaking to a professional property investment advisor to help you accurately and efficiently plan the route to reach them.
At Prospa Property Advisory, one of our QPIAs (Qualified Property Investment Advisors) will assist you in formulating the right way for you to invest in property today. Give us a call on 1300660335 or email hello@prospaproperty.com.au and we can chat today!
