Any property investor, or any type of investor to think of it, who has not made an investment mistake is perhaps being a little economical with the truth. The fact is that the vast majority of us learn our most valuable lessons from our mistakes because quite often if they involve a significant financial loss, it does tend to stick in the mind!
In the midst of a new “hot property market” it can be very easy to forget all lessons you have learned and be tempted to invest, akin to a Siren from Greek mythology luring sailors to their deaths. These are the times you need to sit back, remember events in the past and work out in your own mind whether there are any similarities. The hardest thing to do from an investment standpoint is to sit back while markets continue to plough ahead even though you believe they are overvalued. The likelihood is that you will benefit from this strategy in the longer term but it can be awfully tempting in the short term.
Don’t make the same mistake twice
Many property investors have large egos and find it very difficult to admit that they have ever made a mistake. We all know that we should never make the same mistake twice with our property investments but how many of us can put our hands on our hearts and say we live by that policy? The greatest lessons are those learnt in times of trouble and very often these will separate focused long-term property investors from short-term speculators.
Market volatility and inexperienced investors
Over the last few years there have been major changes within the UK for example where many tax incentives associated with pension investments have been reduced or removed. This has seen many people moving towards the real estate market as their choice of long-term investment. As a consequence, with more information now available via the Internet, many inexperienced investors are making decisions which they should perhaps discuss with more experienced investors. Could the constant flow of new and relatively inexperienced property investors be assisting market volatility?
Perhaps this is when the old adage “if it looks too good to be true then it probably is” might come into play? Sometimes lessons learned away from your investment activities can prove to be useful when building your portfolio.
Admitting a mistake is hard
Whether you are a relatively level headed property investor, or perhaps one who is not used to getting it wrong, admitting a mistake is the hardest thing you will probably do in your investment career. We all like to have this air of confidence, the impression that everything we touch turns to gold but this is not the case. Over the years we have seen many well-established property investors hit troubled times, pushing ahead with investments which seemed simply wrong and many have paid the price. However, those who rebound back time and time again are those able to admit mistakes to themselves and recognise that pride can come before a fall.
If you are able to carve out a long-term property investment career you will likely realise at an early stage that you will learn your most valuable lessons from your mistakes. In theory it is relatively easy to make good money in the good times but it is how you react and how you perform in the more challenging environments which will dictate whether you are successful or not. Sometimes you just need to put your hands in the air and admit that you got it wrong – dust yourself down and start again.