Two of the Biggest Traps Staring At a Property Investor
Michael Yardney writes an article for the website Property Update in which he talks about two traps in the real estate industry every investor would do well to avoid.
First trap of real estate investment: following advice from the wrong people
The first pitfall begins to stare at us when we take advice from the wrong people. When you ask for advice, keep in mind that the person from whom the advice is coming should not have any vested interest. For instance, it doesn’t make any sense to ask a seller’s agent if the property is good enough. Unless the agent is out of his mind, he will always stand for the vendor and present the property in a good light.
Similarly, if you ask a developer for advice, you will hear only what is of interest to him. He has a stake involved, and he is building properties to sell, so you can expect him to sing their praises. That is one person I certainly wouldn’t be approaching for advice when investing in property!
Second trap of real estate investment: Herd mentality
The second trap for a property investor is following the herd mentality. When the market is peaking, investors skip following their rationale. They follow the herd to avoid missing on a windfall. When the market is hitting a plateau, they stop doing their research and sit away from the action waiting for the tide to turn. Both decisions can cost investors heavily.
You can read the original article here.
Warren Buffet asks a property investor to be greedy when everyone is fearful and fearful when they are all greedy. This great visionary does not talk through his hat. Real estate shows us how counter-cyclic investments can triumph at times.
Also, just because the market is at its peak does not mean that any property you buy will turn into gold, and contrarily, a market which has hit its trough may still have a few pearls hidden within its folds. For all you know, there may be a few properties that you can grab for a very reasonable price because of the sale panic. And these can give you tremendous capital growth in times to come.