Rely on Head Not Heart When Buying an Investment Property

Australian Prudential Regulation Authority figures showed an increase of 28% in the number of new home loan approvals for the June quarter – representing a sum of $79 billion.

Of these, owner-occupier loans remain the most significant at more than $50 billion but a most significant increase of 35% was observed for investor loans.

Statistics such as this help to account for clearance rates being high and much action being observed in the property market. The data also indicated that investors and home buyers are creating demand, although each group has different aspirations and goals that they seek to achieve.

It is definitely an issue when investors ultimately make decisions as a homebuyer, despite entering the property market as an investor. In this way, their heart – rather than their head – makes very important decisions.

To make clear-headed, unemotional decisions, it is wise for an investor to buy in a location that is not near their own home and to avoid decorating the property based on their own tastes.

Similarly, investors should avoid purchasing an investment property in a place that they like to holiday, as there is a good chance it will fail to perform as a prime investment location.

Paying an emotional premium (paying more than actual market value) is also a big mistake and something to avoid. If a property is an investment, overpaying never makes sense.