Looking back in hindsight it is often quite easy to spot a “successful” property investment but achieving the same result in real-time is not as easy. While many property investors will have you believe they have nerves of steel and they don’t feel the adrenaline pumping round their body when signing a massive deal, do not always believe them. However, there is a psyche which is very common across all successful property investors which is made up of a number of characteristics we can all associate with.
Reduce the level of emotion
The more emotionally attached you are to a transaction or property the more chance that you will make a mistake and possibly take your eye off the ball. It is an easy trap to fall into, it is human nature but if you can reduce the level of emotion attached to every transaction and every asset you own then you will stand a better chance of being successful. Learn to distance yourself from transactions and try to look at them in the cold light of day as just numbers.
Rather than looking at your property investments as physical assets try to look at them as you would an empty box. This may sound strange, perhaps a little bizarre, but if you simply think in your mind that you are buying and selling boxes then this allows you to concentrate more on creating an actual return than thinking of the asset. This is a trick which many investors use across all investment markets because it makes things feel robotic and matter-of-fact. However, do not forget that you may not sell all of your boxes – you may keep some for later!
If you have made significant returns on investments involving for example £100,000 then why can you not repeat this on a £1 million investment? Straightaway you will obviously notice the greater perceived risk because of the greater amount of money invested but why should you feel that way? If you have a proven investment strategy, you do your research and you work out your figures then why should you feel more pressure investing £1 million than you would when investing £100,000?
It may seem a little bizarre but if you sit back and think of it, these are just figures and whether your return is 50% of £100,000 or 50% of £1 million the basic calculation is the same. Does that make sense?
Have confidence but be realistic
History shows us that the more successful real estate investors in the world have confidence in their own research and decision making process but they also appreciate when they have made a mistake. As they say “pride comes before a fall” and those who continually fight the market despite signs suggesting they got it wrong are very often left nursing significant losses. Run your winners, cut your losers and learn from your mistakes, sound simple?
Human emotion is perhaps the greatest challenge to those entering the property investment market and an ability to look at things in the cold light of day as simple “facts and figures” is a godsend. Those who get emotionally entwined in their investment decisions and property assets will not always think sensibly.