Property Analysis Paralysis
Published on 16/03/2011
The term "analysis paralysis" refers to the over analysing of a situation, inhibiting a decision or action and in effect paralysing the outcome. In the case of purchasing property it is a term widely associated with both home buyers and investors alike. Buying a property is often one of the biggest financial commitments a person will make.
With so much information now available at consumers’ finger tips it is easier to research properties of interest. Many people get so tied up in all the minute details and ensuring every aspect is right, that they often miss out on some good opportunities. In fact, the buying decision can be made to feel over complicated as the buyer might be seeking the "perfect" property upfront, and the fear making any decision which may lead to erroneous results leads to the purchase never being made.
Planning and research definitely helps when making investment decisions, however it should not be to the extent that it overwhelms you and causes you to fail in making a decision and taking action. If you are making all the decisions yourself you have to be ok with the fact that you’re never going to be 100% certain that you have accounted for every little thing. It can be hard to do it alone. Sometimes it helps to have an expert on your side to do all the hard work for you.
Here are Tips to Help Overcome Property Analysis Paralysis
You still need a plan regardless, however this time round, over planning is not allowed. Think of what you need to know before you start and get a grasp of it. Prepare for what would be the worst case scenario and use the information to make a wiser decision.
2. Set a Time for Due-Diligence
You need to allocate a percentage of time that you will spend per area and or property. Give yourself a checklist and tick off the boxes. It is important to keep in mind this can lead you into an over analysis trap, the trick is to decide how many of the boxes need to be ticked for it to be a good property for you.
3. Just Start
When you have made your checklist and have come to some sort of decision as to what aspects you think are more important, stop asking yourself “what if” questions. Just start doing it and learn everything that you do not know along the way. Attend as many auctions and open houses in your targeted area or areas to get an idea
4. Forgo Perfection
Mr & Ms Perfection can exists inside all of us and raise its head from time to time. When purchasing for investment, you need to leave your emotions and personal taste at the front door.
The right time to buy a property is when you can afford to. It is really that simple. It is not about timing the market is about “time in the market”. There is a vast difference between a trader/speculator and a true investor. Your goal when building a quality portfolio should be geared with an investors’ mindset. The key is to purchase properties that will continue to be in demand no matter the prevailing market conditions.
6. Find an Action Taker
Find someone who is able to take action easily. Whenever you are stuck with analysis paralysis, find them and talk to them about your problem. Most likely you will get a positive reply and get the momentum you need to get going.
7. Narrowing it Down
There are a few important things to keep in mind when looking for an investment property. You will need to ask yourself: Should I buy a house, unit or apartment? Do I want an old one or a new one? Which location is best for my plan and what am I trying to accomplish. I would recommend that you have your borrowing capacity worked out in the first instance as this will ultimately determine the amount you can spend.
8. Overcoming Fear of Debt
Do you recall the last time you wanted to purchase a property but fear of debt got in your way? One of the biggest obstacles that paralyse people from investing in real estate can be getting your head around borrowing large amounts of money from banks. This is because many people focus on the total debt rather than how much it will actually cost you to service the debt after all expenses are paid. The only debt to fear is bad debt. Bad debt is borrowing money for items such as a flashy car or boat which is a liability because it depreciates in value. Good debt is leveraging the money you borrow from the bank to purchase an asset such as property that if chosen correctly will go appreciate in value. Your greatest fear should be doing nothing.
9. Learn To Make a Decision
This is an important skill that can help to overcome analysis paralysis. By knowing how to make a faster and wiser decision, you can train yourself to take action faster and take procrastination out of the equation. Practice your decision making skills by setting a 10 second rule to make a daily decision. Often in property transactions you may be put in a position where you need to make a quick decision. If you are bidding at an auction and the auctioneer declares the property on the market to be sold you could be forced to make a decision whether to continue bidding or not and often you may only have a few seconds to do this. If you freeze you could loose the property and potentially a good opportunity. Often private sale negotiations have a deadline on them as well.
10. The Fail Proof Plan
If you think “yes” I’m ready to buy and begin my portfolio but I’m not so sure where or how to start, and if you’re not ready to gamble with such a large commitment then you can always elicit the help of an expert. Buyer Advocates have been around for a while now and have assisted many people with their property decisions and purchases. Be warned that not all Buyer Advocates are the same, some do not advise they just buy for you. Look for a Buyer Advocate that is awarded, hold the appropriate license and has “raving fans”.
For property advice you can trust, click here now to book a complimentary first appointment with a Buyer Advocate from the Keyhole Property Investments team. KPI offer expert advice and guidance in the sourcing and purchasing of property throughout Melbourne. We can purchase a property that matches your criteria, in the shortest possible time frame, at the lowest possible price, with the most advantageous conditions to you. Several packages are available to suit investors, residential home buyers or those entering the market.
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