What motivates you to invest in property?

At this moment in time the return on savings accounts and many fixed interest instruments are extremely low. As a consequence, more people are now looking towards property investment as a means of planning for their financial future. However, what motivates people to invest in property?

Invest in property for financial gain

Anybody who invests in any form of assets is doing so for financial gain. Is there any better feeling than banking a large profit on the sale of an asset? Fear and greed rule markets, rule investors but you need to use these to your advantage to make it work. Balance the fear of missing out on a profit against the downside, consider the greed of holding for the next 1% increase against the potential downside and hopefully this should put things into perspective.

There are many people who invest in property markets with the idea of making a financial gain but with no targets, no firm strategy and no endgame. Unless you have an endgame how do you know whether you have been successful or not?

Beating the market

Pride comes before a fall and the ego of many successful investors has proven to be their downfall. There is nothing wrong in doing your research, going against the market in the short term with the idea of banking a long-term gain. Surprisingly, markets do not always get it right but more often than not they do.

So, while some people do make a healthy return on beating the market and going against the trend, why bother? If you spot a trend in the market and it looks like there is long-term milage why look elsewhere? If you bear in mind the markets reflect the opinions of thousands of investors, who also do their own research, surely in the right moment there is nothing wrong in following the market?

Building an income stream

There is a distinct difference between capital appreciation and building a long-term income stream. Property investors will be well aware of the opportunities to create a long-term income stream which can fund future investment or fund a particular lifestyle. Is it correct to look at rental income as your only real long-term investment goal? Should you have a mixture of capital appreciation and rental income streams? In a perfect world you should be able to put together a portfolio which offers long-term capital appreciation and a long-term growing income stream.

It may take time, it may not always be easy but if the majority of your investments have a significant rental income to fall back on then, in theory, this will offer long-term support to the underlying capital value. After all, it is far easier to value an asset with an income stream than one with no income which is purely dependent upon the whim of investors and the markets.

Remain focused

Capital again, rental income streams and challenging common market perceptions are just some of the ways in which many people motivate themselves to be successful in the world of property. The key to any investment career is to remain focused, have an entry and exit strategy for every investment and spread the risk amongst different classes of assets. It is all good and well banking massive capital gains after investing in one class of asset at the right time, but what happens if your timing is off? Those who put all their eggs in one basket will probably have periods of exceptionally high investment returns but it just takes a bout of bad timing to potentially risk everything. Property investment is a long-term activity, although there is nothing wrong in taking short-term profits when available, as many successful property investors of today will confirm.

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