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Investing without the emotion

When you think of ‘Investing without the emotion,’ what does that even mean? Well, I’ll give you what it means from my perspective and some real life examples of what I’ve done when I was investing and building my portfolio.

Nine properties is how many properties I own in my portfolio. Funnily enough, of those nine, before buying them I had only ever seen one. That property was my first, and the one I decided to live in. That is an example right there of emotionless investing. Of the nine, I had only seen one before purchasing it. Buying property is a massive financial decision, and there needs to be a lot of emotion taken out of that for me to be able to say, “I went on to purchase eight properties without even seeing them in person.”

I started investing in property in 2015, and now three years on I still haven’t seen 6 of them. The big question here is…..

AM I INSANE??…..

LET ME PROVE WHY I THINK I AM NOT ??

Numbers 

Today there is a lot of information with numbers, data, research and photos available from previous sales to the current one. Many platforms and tools also exist to make this information easily accessible. Whilst the numbers might be able to tell you a lot, e.g. the likeliness of a short or long rental vacancy period, it still isn’t enough on its own.

Professionals

After using the analysis to get down to the key areas or property to potentially purchase, engaging the professionals allowed me to take the next step in my investing without the emotion. Here is what some of them can do for you:

Buyers Agent = If you aren’t putting in the time to review it all, a buyers agent can research / source / negotiate / due-diligence & secure the property for you (this will further help remove the emotion from the ‘numbers & negotiation stage’)

Finance professionals = Will support you by ensuring the location meets lending guidelines, the valuation is ordered and your finance progresses through the necessary stages.

Lawyers/conveyancers = Review of the contract, lease, negotiation of clauses within the contract, completing the necessary due-diligence via different searches and verification, and communicating with the sellers side.

Accountant = Ensuring you are set up with suitable tax structures for the purchase of property, e.g. trusts, personal name etc.. so your purchase is suitable to your situation.

Pest & building inspectors (plus other types of inspections where necessary e.g. pre-settlement) = Review of the current condition of the property to check for any minor/major issues.

All these professionals play an important role in keeping emotions in check, the above is also a brief summary of what they do (they often provide a deeper service). However, there is still one more important part to really cut the emotions.

MINDSET

The question I asked myself was:

“WHAT WOULD I GET FROM SEEING IT?”

  • Would I talk myself out of the deal if I didn’t like something that is based only off my opinion, even when the numbers, checks and due-diligence were good?
  • Would I miss out on the deal from not acting quick enough?
  • At the end of the day it is an asset I am earning an income from with numbers displaying just that and my research suggests it is also placed in a suitable location. The due-diligence also ensured it all checked out, what am I actually going to get from visiting it?
  • Could I miss out on interstate deals because of the inconvenience of having to go out and see it? This would limit me to only where I live or locations that are easy to get to.

With the above in mind, I hope you can see how taking out the emotion can really help you become an investor that goes above and beyond with:

  • Due-diligence & engaging professionals
  • Living by the numbers
  • Having a mindset that controls emotions and focuses on the long term.

To this day as I had mentioned earlier, I still have not seen 6 of my own properties. They produce passive income, have grown in value and continue to be assets that have positively impacted my life. 

Regards

Arjun Paliwal, Director – InvestorKit

Disclaimer – Contents of this document are of general nature only and should not be relied upon solely when making an investment decision. InvestorKit nor any of its directors, associates, staff, or associated companies bear any liability from any action derived from the contents of this email. One should always seek third-party investment information from relevant parties such as legal, finance, and accountancy enquiries.