8 Common Mistakes by Property Investors
Please note that we are NOT the original writers of this blog post. All credit goes to the original writers. Find the original post as published at this link: http://www.crei-academy.com/8-common-mistakes-of-property-investors/
Please note that we are NOT the original writers of this blog post. All credit goes to the original writers.
There are a couple of reasons casinos do this:
1. First, they want you to believe they are on your side. They are rooting for you. In a way, they’re. If you go to their casino and lose every time, they know eventually you’ll stop returning.
They want you to acquire from time to time to keep you coming back. Saying,”Good Luck”, and cheering when you win, are their ways of trying to convince you they’re on your team.
2. The second reason for their usage of both of these words is a bit more deceptive. The typical gambler believes you must be lucky to be a good gambler. The casino is more than delighted to perpetuate this myth.
There are no guarantees on any path to success in life, business or investments. Consequently, risk and education are often the mechanisms necessary for knowing more clearly if you’re on the right path.
Here we look at 8 common mistakes property investors make — and how to avoid them.
1. Over-hungry for investments
Everybody knows you should not go food shopping when hungry. And having said that, you should also prevent investing when hungry – Make financial decisions with a full stomach.
When we are hungry we tend to make more rash decisions. Make sure you are not in a hurry and are giving yourself lots of time to make your choice.
2. Cockiness and arrogance
Cocky is one thing. Smart is another. Just because somebody is ultra-rich it does not mean that they are also smart investors.
People are able to feel more confident in their own judgment — sometimes overconfidence and arrogance do mean the same thing.
This overconfidence could result in trading too much in investment portfolios, believing that you can time the markets, and to pursuing past performance.
Another trait called “action bias” is a part of the, when human beings believe that doing something is positive, and are prompted, for instance, to tinker with their investments. But doing something can cause more damage than doing nothing.
Obviously, as mentioned above, inactivity may also be harmful occasionally. The important thing is to have a rational process supporting your investment decisions and to stick to it.
Simply hire a property manager or ask the salesman to recommend one in case you lack connections. How nice.
It isn’t smart and it is not true. It’s complete idiocrasy if you think your property manager has your full interest at heart. They don’t and they never will.
Property expenses can easily be inflated with no knowing. And for all you know living in your ivory tower 10,000 miles away, your house is tenanted with a wanted criminal and your property manager never know or care. They’re a smokescreen to cover the complexities of investing in a whole foreign industry.
It’s the lazy means of investment. It is not investing. It is punting your property will see capital growth to cover likely rental losses and over-run property costs.
It is like paying someone hoping to conduct your startup company profitably while you sit at home watching Netflix.
Having said that, until you get to the scale of Disney or Novotel, you aren’t getting a great deal out of foreign property managers.
4. Confirmation Bias
People like to be proved right, and so seek out information that supports their notions.
This is known as”confirmation bias”. An investor will make a determination and find information that backs it up.
Social networking platforms such as Twitter and Facebook are making it more difficult to escape this deep human weakness.
Much of this content gives the user the illusion of being educated but, partially through the power of confirmation bias, it’s largely false confidence. The gambler
When you toss a coin three times and get heads, lots of people think the fourth period will be a head.
Investors who have been very successful in volatile markets are more eager to make a risky decision as they’ve had a very favorable experience. Because they’ve been lucky a couple of times they become arrogant, which leads to them making poor decisions, as they underestimate the investment risk.
The opposite is also true: those who’ve had a poor run of investment returns often lose all their confidence and discount good investments, purely on the premise that their previous choices under-performed.
6. Reluctant to decrease losses
The same mental focus on losses can make investors who have made a bad call reluctant to cut their losses and move on.
Investors hang on to losing investments when they should have been rid of them as soon as the notion of crystallising that loss is too painful. Focus on negativity
People tend to focus on losses rather than gains.
When presented with an equal opportunity for loss and for gain, an individual will disproportionately focus on the reduction, meaning that they can miss out on the investment opportunity.
An example is looking to buy a property for $1m. The buyer is then advised that if the market falls they could lose $100,000 in the next two years, but if it rises they could gain $100,000.
In this scenario, the purchaser is a lot more alerted by the reduction than by the gain, even if it’s equivalent.
8. Penny wise, pound foolish
Everyone loves a bargain, but the urge can hurt investors. People use a mental process known as”anchoring” to determine whether an offer is great value.
If you are offered something at a price of $20, that becomes your measuring stick for all other offers, often without exploring whether $20 was actually a good price.
This implies that when the same item is offered for $17 it appears to be great value. Sales people often exploit this fact to make people believe they’re getting a bargain
This is the largest investment failure people make: they make an investment choice simply because they think they are getting it for a lower price.
How can you avoid these mistakes
Be wary of other people’s advice. Individuals who are giving you guidance are the chicken at the eggs and ham breakfast and you’re the pig.
The first kind of specific thing I would like people to get in their minds is that your mind is always tricking you into believing the world is a more certain and noble place than it is.
It isn’t.
It’s doing a variety of things to make you comfortable with the fact it isn’t certain and that contributes to misjudgments.
Be very wary of people who come at you with a great deal of confidence and predictions about what is going to happen whether those people are investment advisors or property “specialists ” or doctors.
Even the savviest of us make mistakes with investing — trading too often, refusing to sell losing stocks or chasing past performance. These errors, and a lot more, are common among investors.
Next time you’re at the casino that I want you to count how many times you hear the words”Good Luck.”
Whether you are checking into your room, cashing in some chips, or simply getting a drink, you will be pleasantly told,”Good Luck.”
People tend to focus on losses rather than gains.
When presented with an equal opportunity for loss and for gain, an individual will disproportionately focus on the reduction, meaning that they can miss out on the investment opportunity.
An example is looking to buy a property for $1m. The buyer is then advised that if the market falls they could lose $100,000 in the next two years, but if it rises they could gain $100,000.
In this scenario, the purchaser is a lot more alerted by the reduction than by the gain, even if it’s equivalent.
8. Penny wise, pound foolish
Everyone loves a bargain, but the urge can hurt investors. People use a mental process known as”anchoring” to determine whether an offer is great value.
If you are offered something at a price of $20, that becomes your measuring stick for all other offers, often without exploring whether $20 was actually a good price.
This implies that when the same item is offered for $17 it appears to be great value. Sales people often exploit this fact to make people believe they’re getting a bargain
This is the largest investment failure people make: they make an investment choice simply because they think they are getting it for a lower price.
How can you avoid these mistakes
Be wary of other people’s advice. Individuals who are giving you guidance are the chicken at the eggs and ham breakfast and you’re the pig.
The first kind of specific thing I would like people to get in their minds is that your mind is always tricking you into believing the world is a more certain and noble place than it is.
It isn’t.
It’s doing a variety of things to make you comfortable with the fact it isn’t certain and that contributes to misjudgments.
Be very wary of people who come at you with a great deal of confidence and predictions about what is going to happen whether those people are investment advisors or property “specialists ” or doctors.
Even the savviest of us make mistakes with investing — trading too often, refusing to sell losing stocks or chasing past performance. These errors, and a lot more, are common among investors.
Next time you’re at the casino that I want you to count how many times you hear the words”Good Luck.”
Whether you are checking into your room, cashing in some chips, or simply getting a drink, you will be pleasantly told,”Good Luck.”
ANYONE can build sustainable prosperity in property… if they want it badly enough.
Join us in “The Ultimate Smart Property Investor” Workshop on 25th March — 26th March 2017!
This 2-Day property workshop can allow you to build your action plans to achieve your wealth objectives.
All you have to do is show up!
Have you gained from our posts? LIKE us Facebook for more benefits.
To your investment success,
Visit FreeRealtyOnline.com to list your home for sale by owner at no charge!