By Guest Blogger, Peter Koulizos, property lecturer and author
www.thepropertyprofessor.com.au
Analysis paralysis sounds like a dreaded medical condition but it’s not. It is a dreaded condition but it’s not medical. Analysis paralysis is where people procrastinate and do endless amounts of research and analysis but never end up buying property. It’s the opposite of FOMO (Fear Of Missing Out) where people do no research or analysis and buy just because they are scared they will miss out.
The worst case of analysis paralysis I have encountered was a couple of years ago. I attended a seminar at the invitation of a friend of mine and in this seminar was a lady who had come to one of my property investment classes almost 20 years ago. During the lunch break we had a chat. She mentioned that she had attended many wealth creating seminars over the years. I assumed (wrongly) that if she was so interested in making money and had attended countless seminars that she must have a few properties by now. To my surprise, she hadn’t even bought one!
This is an extreme case but it is not uncommon for people to be looking for property for many months or even a couple of years and in the end, not buy anything. “Why is this so?” you may ask.
Some of the excuses (not genuine reasons) that people give for not buying property despite countless hours of research, analysis, attendance at hundreds of open inspections and seminars are commonly:
- “I am waiting for prices to fall”.
- “I am waiting for interest rates to fall”.
- “It’s just not the right time for me yet”.
- “I haven’t found the right property yet”.
All of these excuses lose their legitimacy if you just keep repeating them over and over. To have been looking for a month or two and you can’t find the right property, I can understand that. To be looking for years and you still can’t find the right property, there is something wrong.
To create wealth you need to actually buy a property, not just think about it. In the end, you must buy a good property at a good price. Too many people look for the “perfect” property and unless they find this so called “perfect property” they won’t buy anything. This is like saying that unless I can get 100 out of 100 for the test, I am not going to attempt it. Rather than being disappointed at not scoring 100 out of 100, how about aiming for a High Distinction, or an A+, or an Excellent? You are far better off buying a great quality property (or more than one) in a great quality location rather than searching for that perfect property. In all my years of teaching and investing in property, I have never found the “perfect” property. However, I have found many A grade, top class, excellent and outstanding opportunities by following some simple steps. These include:
Search the right city. Different cities are at varying stages of the property cycle so you need to select cities that you feel are about to start the upward stage of the property cycle. However, if you are going to buy and hold for the long term, say 15 years or more, then picking the right city is not as important because your property will probably go through two or more property cycles.
Research the right suburbs. If capital growth is your aim, look for undervalued suburbs close to the city and/or water. One indicator of an undervalued suburb is if the median house price is lower than the adjacent suburbs. If you want to narrow your search, look for gentrifying suburbs. That is, suburbs that were ugly ducklings but are transforming into graceful swans e.g. Paddington, Balmain, Richmond, St. Kilda.
Buy in the right street. The best streets are wide and tree lined. The houses are ideally set back from the front boundary and the street should be lined with appealing homes.
Look for the right style of property. The properties that tend to perform the best are the older style properties. We generally refer to them as character or period style homes.
There is a lot of research to be done and you need to be well informed but in the end, you don’t need to be a genius to buy property. If you don’t feel comfortable with all this research and analysis and/or you feel that you need help to pull the trigger to actually buy a property, get some professional help. A Qualified Property Investment Adviser (QPIA) can assist you with setting your goals, formulating a plan and can assist you in executing your plan but if you just need to cut to the chase and want someone to buy the property for you, engage a good buyer’s agent.
A QPIA or buyer’s agent don’t come for free but when you consider that you will probably be making the most expensive decision of your life, this will be money well spent.
It’s not easy buying property but you also don’t need to study for a PhD to buy a property. A bit of homework, some research and analysis and with some assistance from your trusted property professionals, you can turn your thoughts into action.
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