Don’t Be an Emotional Buyer
Today I want to talk about the decisions that we all make when we are buying an investment property. We all make decisions when buying that are based on emotion.
Yes, we all have to eat, sleep, be clothed and have shelter but stick with me on this for a minute. Just about everything that you consume, buy, purchase or already own you got by making an emotional decision.
A friend of yours may have told you about this wonderful product, so you bought it. Or, you saw an add in a magazine, tv commercial, billboard, online or some other form of advertising. You see, you made that decision to buy based on how it made you feel.
If the advertisement made you feel bad you probably wouldn’t have bought it. If your friend said this is horrible you would steer clear of it. For the most part our buying decisions are made on emotion or impulse.
When you are buying an investment, any investment you need to train yourself to not get emotionally attached. You need to learn how and when to walk away… no matter what you have invested.
The best way to learn how to do this is on the front end. When buying a foreclosure or distressed investment property it is IMPERATIVE that you stick to the numbers. Nothing can get you into trouble faster than the thought of “I love this cute little house, I gotta have it.”
Remember, this property is for you to make money on. It does not matter whether you like it, what matters is what the numbers say.
I was speaking with one of my clients today and he was asking me this exact question. He wanted to know how it is that I cut through all of the clutter and decide on which property to buy.
My answer to him, and to you, is quite simple…pay attention to the numbers ONLY and everything else will fall into place. You will make money from day one…and that is what it is all about.
When I say numbers I am referring to what the property costs vs. what I can resell it for. Or, what the property costs vs. what I can rent it for and therefore what my cash on cash or internal rate of return is.
I am also referring to the numbers (if it is a fix/flip) of days on market, how many competing listings there are, if the neighborhood is selling/renting well.
All of these things are numbers. Remember the old adage…You make your money on the Buy, NOT on the Sale. I believe in this wholeheartedly and cannot recommend enough that you do your due diligence and spend your time on the front end…studying the numbers PRIOR to buying.
If you are willing to stick to the numbers your emotional buying decisions will be NO where to be found. This one small thing can make a HUGE difference in your income.
To Your Success and Nothing Less.