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Managing Investing Comforts

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Transcript

As an investor comfort management is so important. I’ve seen so many scenarios go wrong. Just because of comfort management. People keep thinking property property property or Finance, the numbers, the interest rates, but you can forget that if you don’t have the acid that
matches your comfort all of it could be lost.


I’m going to give you an example now where you know comfort management when it’s not looked at appropriately can impact you financially. Let’s look at a property where you might have bought it in maybe a bit of a rough patch, maybe an area where there’s opportunity for long-term value growth off the back of gentrification.


But when you’re looking at it, maybe there’s some repairs to be done,
maybe there’s a not-so-pleasant community from a tenant base but time and time again, let’s not kid ourselves these properties have produced results in the long term. We’ve seen areas that once people said that’s too far. I don’t want to live there that’s gone and done really well. Then we’ve seen other areas where that’s a rough patch and then that rough patch is moved out further and that is a new area that is gentrified and Producing phenomenal results. So in terms of performance. Hey, these properties can be in the peak performers if you add it to your portfolio and manage it appropriately. But what is the part that’s getting lost here is comfort management. If you A – didn’t have expectations of what could happen in that rough patch, what could happen from the type of tenant you get,
what could happen from maybe the type of property in the repairs
and maintenance you might get. Those expectations will hit you all at
once and if they don’t hit you now they will hit you later. And so from that perspective as an investor you start to question your decision on buying that property. You start to question was it the right property? You start to question where does it fit in my portfolio, and is it even worth me
holding onto. And then you start speaking to your friends you
start sharing stories about how the property we had.


”This happened to it. And that happened to us it’s a nightmare” and off the back of nightmares guess what your friends are saying? Yep, get rid of it get rid of it. You don’t want that. I just bought this nice property over here and look at all that. But rarely, they might not know the performance levels that could be building up in the back end. So imagine it’s building up in performance in terms of Capital Growth, which will far outweigh in most scenarios the amount of repairs and renovations and things that you have to do, or the money let’s lost in a “salty tenancy” but from that perspective, it’s forgotten because of your comforts, because of your impact, because of time stress because of the way you’ve managed now and the headaches you’re getting and all that sort of stuff. And then guess what happens next.
That’s right, you sell the place.


So then what happens when you sell the places you’ve invested say x money on Stamp Duty, lawyers ,professionals on the buy-in. So your true purchase price is not representative of what you actually bought it because there’s all this extra that you paid. Then on the sell, you’ve got the same extra that you paying to get rid of it. And now all of a sudden you’re like, you know what I’m going to use this money to buy the “better investment” and now that extra that you had or where you sold it for and where you bought it for that money that you made its now come down to here because what you can reinvest is far less because the money that comes out even if you sold it for a little bit more is probably going to break even or not allow you as much because you have to pay transactional cost again to buy. So it’s costs on the buy, costs on the sell, cost on the buy again and all of a sudden your asset base is smaller.


Now look you can make it up and say let me buy a better asset for that asset base. So even though it’s smaller longer term, I feel that ROI percentages might catch up or do better. But in saying that just imagine what could have happened if when you first made that investing decision, it was one that had your comforts in mind. So I think of a successful property strategy,
it needs to consider your finance strategy, the property strategy, and actually one that’s always forgotten about is your risk and comfort. It’s not always about having the best property because the best property can mean you go in there you hold it and you can’t hold it because of the environment around you or because of the comforts in gray your mind and all of a sudden you let the “best property” go. So sometimes it’s about managing comfort levels with that right property in that comfort level to achieve a certain result. Or sometimes It’s really just having that difficult conversation with someone or yourself and going “Look, I need to change my mind on what I’m comfortable with or not” Because someone may not be comfortable buying an existing house ever and only by new.


Now, some people have made that work for them. But a lot of people haven’t thru losses on off to plan thru losses on land thru losses
in so many parts and that’s when they have to question themselves “Is my comfort level set right for me to invest?” and that’s when that discussion comes to light.

So that’s it from us here at InvestorKit, the Experts in Wealth Creation, helping you take action.