A common question people ask is what type of property they should buy when considering an investment property. Investing in property is a significant decision, particularly if you’re considering investing interstate, or even overseas where your knowledge of the area is more limited.
Brisbane in particular has become an attractive destination for interstate property investors, however choosing the right property is crucial to the success of your asset.
Savvy investors tend to follow all of the regular rules of investing – considering the location, conducting a thorough market analysis, evaluating growth potential and selecting a property manager – all of which are critical steps to success.
However a crucial factor often overlooked is how emotions can play into decision making. Sometimes an investor may let their heart rule over their head and choose the type of home they themselves would like to live in, which can be detrimental to the success of their asset.
It is commonly known that when buying a home to live in, 90% of your purchasing decision is based on emotion and only 10% on logic.
However, research has shown that this approach may not be the best when it comes to investing, as it can lead to over-capitalising or simply choosing the wrong property for your investment goals.
Taking the ‘Heart’ out of ‘Heart over Head’
The savvy investor should consider whether:
- The property appeals to the demographic of those who lives in the location
- That the property can garner the return they are seeking
- Tenants can afford to pay increasing rent over the years
- The property suits the culture and lifestyle of the residents living within the area
Personal preferences can actually impact on the performance of your asset, and the better your understanding of the geographic area and the culture, amenities and lifestyle of its residents, the smarter your decision-making can be. Ultimately, aligning with the community’s needs can be the path to financial success.
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