Okay, so thinking about real estate investing, super exciting, right?
But hold on before you start picking out paint swatches for your dream rental property because we got to talk about keeping those emotions in check.
Absolutely.
This deep dive is all about making sure your heart doesn’t lead you to a money pit.
Yeah.
Because let’s be real for a sec. Smart real estate investing, it’s about what renters want, right?
Not necessarily what we’d buy if we were moving in.
You’ve hit the nail on the head there. Real estate, it’s just different. It’s not like stocks, you know, it’s tangible. It’s brick and mortar. It’s the largest asset class out there. You walk into a place and you can practically see your furniture. You know, you can almost smell dinner cooking in that kitchen. And that emotional connection, it’s a real thing, but for an investor, it can be risky.
Oh, tell me about it. I once almost bought this beachfront apartment and I swear the only reason the only reason was that sound of the ocean. Like I could practically taste the mis,
right?
Thankfully, my bank account intervened and maybe a little bit of common sense, too. But it just shows how easy it is to get caught up in the feeling of a place, you know, rather than the hard realities.
Exactly. That’s the thing. That’s when those personal preferences, they can really trip you up. Yeah.
We start picking properties we love, not what’s going to appeal to the, you know, to the most renters out there. And that is a recipe for an empty property and a big old hole in your pocket.
So true. So then, how do we avoid that trap? Let’s say I found this place Right. And I am loving the exposed brick, that vintage fireplace. But those things might not exactly scream rent me to everybody else. So what should I be focusing on instead of just, you know, my inner interior designer?
Data, data, data, data. That is the key. Instead of getting swept up in a pretty facade or whatever, you need a solid strategy. You need a checklist, right? And it has to be based on cold hard facts. We’re talking about market research, right?
What kind of properties are in high demand in that area? What are the rentals looking like? And by that we mean the annual rental income compared to the property’s price. You know, what are the vacancy rates like? As in, how often are similar properties sitting empty?
So, literally, think like a business owner, not just a, you know, someone who might live there. Makes sense. But I’ll admit, it’s tough sometimes to resist, you know, a certain neighbourhood or like that one type of property that you just gravitate towards.
I get it. But that’s what we call the comfort zone trap. And we have to talk about it. We like what we know, right? Like maybe buying in your own neighbourhood. But sometimes being too familiar can make us miss out on other good opportunities.
Sticking to your usual even when there’s a whole menu to explore. Right. I get it.
Exactly. Yeah.
We might be missing out on better rental yields or places where prices are going up faster, you know, and all because we haven’t looked outside that comfort zone. So, challenge yourself a little. Consider those areas that you might not have uh looked at before. Remember, data should be your guide, not just what feels comfy.
That is some solid advice. And speaking of getting out of that comfort zone, vacation homes. Oh man, I could already picture it. That cabin in the mountains, beachfront apartment, sunset views.
It’s tempting, right? The vacation home. But let’s let’s bring it back down to earth for a minute,
right? We can’t let our personal desire for a little ski chalet, you know, cloud our judgment when it comes to how well it’ll actually rent out year round. How do we stay grounded when we see those dreamy listings?
Cold, hard, financial analysis. That’s how is this a place that’s going to be rented out consistently
or just, you know, for part of the year, will you actually make more than you’re spending? Don’t forget those times when it’s just sitting there empty. Remember, prioritize that consistent cash flow, not the emotional attachment.
So, it’s a business decision, even if it feels like an escape. Detach from the fantasy and focus on the realities of those financials.
Exactly. And speaking of finances, there’s another tool that can help you make those tough choices and avoid those emotional traps. financial stress testing using SuburbsFinders Investment Property Analyser!.
Stress testing. Okay, now I want to hear more. What is that and how does it, you know, work with real estate.
So, picture this. You look at how a property would do, not just if everything goes perfectly, but if the market takes a hit, you know, what happens if interest rates go up, recession hits, even something totally unexpected like, I don’t know, the factory in town closes.
Hope for the best, but prepare for the worst. Love it.
That’s it. By playing out these what if scenarios, you’re looking at things realistically. You’re asking yourself, can I still afford this if I’m not bringing in as much rent? What if something breaks or it sits empty for a few months? Do I have enough put aside?
It’s like uh putting on financial armor. Protects you from those what if anxieties, you know, and when you know you can handle the rough patches, you won’t panic and make a risky move out of fear.
Exactly. You’re less emotional, so you’re more likely to make decisions based on, you know, the actual data even when the market’s having a bad day.
And speaking of emotional roller coasters, our research really highlighted these different phases people go through when they’re buying property. It’s a wild ride.
Oh, it can be for sure. And if you know what those phases are, you can navigate them, you know, way better. Everyone experiences them differently. But just being aware of them helps a lot.
So, let’s uh break them down. First up, infatuation. You walk into a place and boom, love at first sight. The hardwood floors, the chef’s kitchen, the
Right. Right.
It’s very easy to get caught up in that initial excitement.
It’s that initial spark, right? Like This is the one. Very exciting. But that is when we have to be extra super careful. We are not shopping for our own home here. No matter how much it might feel that way in the moment.
It’s like you went on one date and you’re already picking out china patterns.
Exactly.
Yeah. Those crown moldings might be gorgeous, but hold your horses. Don’t fall head over heels until you have looked at all the numbers.
Right. Take your time, get the data, and don’t be afraid to walk away. If the numbers aren’t there or something just doesn’t feel right, there are other fish in the sea.
And speaking of ups and downs, after that first infatuation phase, sometimes you hit well, despondence. You lose a bidding war. The inspection finds something. It’s easy to get discouraged.
Oh, I’ve been there. Lost what I swore was the perfect property to some all cash offer. Talk about a punch to the gut.
It happens and it’s tough for sure.
Okay.
But that’s where, you know, that investor’s resilience comes in. You can’t let those setbacks derail you. Remember, it’s a marathon, right? Not a sprint. There will be other great opportunities.
Gotta keep that long-term vision, that investor mindset. And then when it all comes together, you’ve done the work and you finally close on that property. Triumph, the best feeling, seeing your strategy actually work, but and this is important, it’s not the finish line, more like the starting line of a whole other race.
Yes.
Right now, the real work begins. Managing the property, finding the right tenants, handling all the maintenance and the market changes.
Right. And that part is managing the investment that requires the same, you know, level-headed, data driven approach as choosing it in the first place.
So, what does this all mean for our listeners who are, you know, ready to dive into real estate?
It’s simple. Keeping your emotions in check. It’s not a one and done thing. It’s a practice. You’re always working on that analytical mindset, building up that financial resilience we talked about, and never ever letting those dream home fantasies lead you astray.
Love that. So, before we wrap up, here’s a little something to think about. What is it that makes you really want a property? Is it the location, the style of the place? Figuring out your own personal weak spots, that is a huge step towards becoming a smarter investor. Until next time, happy investing everyone and remember, keep it data driven.
