Landlord Syndrome: A Barrier to Smart Investment Strategy
In an article for the website EBG, Larry Arth asserts that an investor should primarily aim to be just that- an investor- and not a landlord. He also suggests that oftentimes, the landlord mentality turns out to be a mindset crime most of the investors cannot completely cast away.
Let us say our portfolio is doing well and we are gearing them negatively and positively to balance our sheets. Let us further assume that we are buying a property every few months (or yearly) to expand the portfolio considerably and consistently? But are we still shedding the landlord mentality?
Is it a smart move to invest in one’s own backyard?
Arth ruminates on our penchant to invest in our own backyards. Aren’t we inclined to think that buying close to our homes will make the job of property management just so easy? Arth does not doubt this line of thinking but shoots a rebuttal- are the best investment properties lined up in your backyard?
Are you lucky enough to be living exactly where the property market is picking up and there are great investment deals to be had? Great chance that you will say NO.
Savings against opportunities lost
Now how much can you make by buying close to your home and overseeing the property management yourself? May be $100 to $150 yearly on a property. If you have 6 such properties, you will save something like $900. Equate it with the losses you make because you left out on the best areas- those which are blessed with high capital growth.
You can read the original article here.
Judge your risk profile
What Arth talks about certainly merits attention Just as important an investment strategy in my opinion is sorting out your risk profile. For instance, when you invest in land aimed for holiday resort construction or hostel accommodation, you narrow down your arc of buyers. Are you willing to do this?
Also, the lenders do not warm up to such off-the-plan projects too easily so are you ready to cough up extra upfront costs from your own pocket. These questions also merit your due attention, I suppose.
Are you obsessed with the Landlord Syndrome?