How do you keep emotions out of purchasing ?

Discussion in 'Investor Psychology' started by hugh72, 13th Feb, 2015.

  1. hugh72

    hugh72 Member

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    Interested in people's thoughts on how they keep their emotions out of the decision making process when looking at ips? I know I tend to find something suitable with a decent yield and have overpaid on occasion especially when buying interstate in person when you don't have the luxury of just attending local opens every weekend and feel the need to act quickly when you find what your looking for
     
  2. WattleIdo

    WattleIdo Member

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    Buy something butt ugly - not joking.
     
  3. neK

    neK Member

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    Have someone who also invests in property around to bounce ideas off.
     
  4. Michael_X

    Michael_X Member

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    1. Know the market really well
    2. Do the numbers, are you happy with the yield and capital growth potential
    3. Try to have several options so you don't get attached to one property
    4. Continually remind yourself, another great listing will come up next week :p

    In saying that, overpaying a bit for the right property, a few years later down the track you won't even notice it.
     
  5. Harro

    Harro Member

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    Treat it as a business decision not a "Love Affair".
     
  6. Ace in the Hole

    Ace in the Hole Don't compete, Dominate !

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    I reckon buying by the numbers would be pretty emotionless.
    i.e. Buy without even inspecting, but maybe get a building and pest report and provided all the numbers and conditions meet your criteria, submit your offer.

    What is it you're actually looking for?
     
  7. hugh72

    hugh72 Member

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    I have bought sight unseen twice before, relied on B&P and research but don't think I will do it again not that they were bad purchases.
    I was thinking about mindset really and wanting to sharpen mine as everyone approaches things differently and it is good to get different perspectives.
    I know some people always buy sight unseen for this reason.
    Buy something butt ugly haha you might be on to something
     
  8. MIW

    MIW Member

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    I use a template when looking through properties, when most items on the template are ticked off, then I get excited. I talk with the agent as little as possible. It I am interested I then have a template for offers, if I offer more I request more in return, conditions like earlier access or lower deposit or later settlement etc....
    If the IP goes to auction, what I did in the last one I transferred only the 10% I was willing to pay to the cheque bank account, so if the price went over I knew I had a limit of just that amount, so I couldn't bid higher, luckily, I was successful and managed to buy it.... It at least removes the emotion not to bid higher, right?:)
     
  9. oc1

    oc1 Developer

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    You're not a robot. Aim to keep emotions to a minimum.
     
  10. property_girl

    property_girl Banned

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    I find it useful to walk away and mull it over. Let the emotion ebb away. If I am under pressure, I am honest and say that I need time to think about it. Don't listen to real estate agents when they say a deal like this won't come up again. Don't make decisions under pressure, because that emotions are likely to be high and you're not thinking with the rational part of the brain.
     
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  11. Biz

    Biz $17 DOLLAS YO!

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    Good advice.

    I have a good example of this. I just picked up a property over 60k less than what the one next door went for a week before. Same size block, same size house. Next door was a nicer renovation but no way over 60k difference. Next door had 5 offers on it, the one i bought was just me. People got carried away with emotion based on stainless steel appliances and a new bathroom.

    I would have like the property next door at the right price but there was just too many emotional buyers willing to pay over the odds so i went for the more basic property next door which will make for a better rental property anyway.
     
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  12. Heinz57

    Heinz57 Member

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    Just signed a contract on Australia's ugliest property. Only emotion is shock on the faces of people I show the photos to.
     
  13. sanj

    sanj Member

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    This is good advice
     
  14. vaughan

    vaughan Member

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    I get pretty excited when the number come up well! :)

    Alternatively, ask yourself: What would Spock do?
     
  15. Richard Feynman

    Richard Feynman Mortgage Broker

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    Know your price* and walk away if you reach it.

    * Research, do the numbers, model how it fits into your portfolio etc -- you shouldn't really be purchasing property if you haven't done this.
     
  16. Kinnon Bell

    Kinnon Bell Member

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    Treat it like a business and buy something that works on paper and not because you like it. Like others have said, be prepared to walk away - once you have done that a few times it makes future purchases a bit easier.

    Also, the deal of the century comes by at least once a week.

    I'm a spreadsheet kinda gal and when I'm looking for an IP (or even narrowing down an area to invest in) I list all the potentials in a spreadsheet then I have columns that are my criteria ie price, rental return, whether it needs a reno, bedrooms, bathrooms, car spaces, vicinity to amenities etc etc and have a score based on each bit of criteria so a place that is walking distance to a train station would score an 8/10 whereas one driving distance would be a 5/10. I then add up all the scores and shortlist the ones with the highest score to inspect.

    Looking at it as raw data on a spreadsheet helps take the emotion out of it.
     
  17. chilliblue

    chilliblue Member

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    All good points raised above.

    I personally found it easier to remove emotion the more that I purchased so experience will also help.
     
  18. citystar

    citystar Member

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    I cut out the emotion by letting the numbers do the talking. Before putting an offer down I know what sale prices the suburb and even that particular street is achieving (RPData). I already know my minimum rental yield I am prepared to accept and (my predicted) capital growth for that area. Based on the sale price and reno required, I have an upper limit for what I'm prepared to pay before I walk away.
     
  19. C-mac

    C-mac Member

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    I just never live in my IP's. When it is not my personal home, the care factor of 'emotion' goes out the door :)
     
  20. Eugen234

    Eugen234 Member

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    If the numbers don't add up...NEXT!!