It was meant to be an emotionless liaison – black and white, no strings attached and an arrangement purely about the money. Then the overpowering allure of rustic charm, old-fashioned good looks and a potential for something much more took hold of me. This isn’t my first pony show, but I fell – and I fell hard.
I’ve been checking out the market for a few weeks, since deciding it was time to throw my hat in the ring once again. I figured out my budget, a list of target areas and a desired rental yield, and then I went shopping.
Before last week, I thought I was pretty clinical about it all. I considered myself the sort of investor who can control any premature feelings of desire, which occasionally have the potential to overrule reason. It seems I was wrong.
Without realising until it was too late, I fell head over heels for a renovator’s delight in Brisbane’s inner north. Two days after I spotted it, and after inspecting it once, I was smitten. As each hour passed, I became more and more determined to make it mine.
In the end, it didn’t happen. I was shocked by the level of disappointment I felt when the agent told me another offer had been much higher than mine. Thankfully I hadn’t gotten too carried away, but I did edge over my predefined ceiling price… and I’d already started daydreaming about colour schemes.
I sheepishly explained the experience to a friend over breakfast on Sunday, only to find her nodding in sympathy. “That’s how I wound up buying a unit in St Kilda about 10 years ago,” she said. “It’s not like I was ever going to live in it, but I adored it all the same.” It seems even a seasoned investor is susceptible to the odd bout of love sickness.
Perhaps it’s time for a refresher course on the basics of avoiding a potentially dangerous attachment. Here are some simple tips for keeping your prospective purchase at arms length until the ink on the contract is dry.
Keep a cool head
Love at first sight is rarely a good thing when it comes to investing. If your feelings are especially strong, they could cloud your judgment or cause you to gloss over (or miss entirely) any imperfections or shortcomings. Worse, you might be willing to put more money on the table than you should. Things can move quickly, but try to slow down and take a step back from the situation.
Have a watertight ceiling
Once you’ve found a property that stacks up, assess what you can reasonably afford to pay for it. Decide on your ideal purchase price as well as an absolute maximum. Make that second figure your ceiling and don’t go above it.
Of course, what you’re willing to pay and what you should pay are two different things. Do your homework and figure out what a comparable property in the area is worth. If your ceiling is above that, it might be worth reducing it.
Find a sponsor
If you’ve got a trusted friend who understands property or a mentor you turn to for investment advice, enlist them as your sponsor. Talking through your thought process might help you see the bigger picture. An outsider’s perspective will be more clear-cut than yours. Someone who can dish out tough love when things get out of hand could save you from a costly case of buyer’s remorse.
Keep your options open
Even if you think you’ve found the one, keep looking. It’s good to have a fallback plan if things don’t work out. Pinning all your hopes on one place might make you more inclined to act rashly.
Know when to walk away
If you’re going tit for tat with a vendor or another potential buyer and the price is reaching or stretching well beyond your ceiling, it might be time to bow out. It’s okay to move on and find something that better fits your needs.
Shannon Molloy is the deputy editor of Australian Property Investor magazine www.apimagazine.com.au