Mistake number six – They let their hearts do the figures.
What do I mean by this? Well, I remember listening to a marketing guru giving a talk to a bunch of salesmen and telling them that, at a subconscious level, all decisions to purchase are based on emotion. Having decided “in their hearts” to buy, purchasers then find the facts to support the purchase.
In my experience this happens in property all the time. An investor gets “emotionally” attached to a property and rather than look at it in cold investment terms, they start to fudge their figures a little to make them stack up, especially if the deal is marginal.
Perhaps they regret the amount of research they did, especially if it doesn’t support their hunch. So they start to ask themselves these sorts of questions as they punch away on the calculator. “What if I just knock ¼ % off the yield?” “What if I am able to sell it for an extra £2500?” “What if I play with the figures a bit until they stack up?”
I’ve done it myself. In fact I did it just the other day. I saw a property that I “wanted” to buy, but the figures don’t really support it. So I started to try and justify buying it for other reasons. I caught myself before I put in an offer and made myself let it go.
If you find yourself doing this be careful. You might “want” to buy this property but make sure it’s because it’s a good investment and for no other reason. As a clever man once said “Make sure you fall in love with the deal and not with the property”.
In the next post we’ll take a look at mistake number 7.
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, Author & Property Investor