At Prospa Property Advisory we see a number of different types of investors. Here’s a few investor types that lack the correct mindset to be successful with property.
1. No Fear
This person jumps in at any opportunity that appears glossy on the surface. ‘No Fear’ 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 quite often their ‘strategy’ – or lack thereof.
2. 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 ‘pretty’ photos of the 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 generally come from guesswork.
3. The Overcapitaliser
This Over Capitaliser 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 Capitaliser 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 Capitaliser a lot of money.
4. The Tightwad
The ‘Tight-wad’ landlord who spends little or no money on maintenance on their property, pretty much the polar opposite of the Over Capitaliser. A poorly kept property is generally unappealing to tenants and will often mean the property is not achieving optimal capital growth. This can also result in a revolving cycle of unhappy tenants which means additional stress and cost finding new tenants.
5. The Overanalyser
The Overnalyser is generally someone who thrives on research and information. Don’t get me wrong, research is the key to any successful investment however there comes a point where people will fail to act because they overanalysing every aspect of the potential deal. This often leads to the Overanalyser becoming overly cautious in their approach and ultimately fear takes over. The Overanalyser 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.