Use business psychology to make more profitable property investments
Although we may think we make our decisions based on facts alone, we’re actually not as rational as we imagine.
Previous experiences and emotional factors will impact on our property investment thought-process. Therefore, it helps to be aware of some common influences and what effect they have on our property investment strategies.
Don’t jump on the bandwagon
Because a particular strategy is working well for someone else, it doesn’t mean it’s right for you. Personal circumstances come into play, and you have to analyse if a proposition will sit comfortably with your financial situation and lifestyle.
The problem is, we all have a fear of missing out. And that can be enough to persuade you that a property investment is right for you when previously you may have dismissed it as too costly or time-consuming, or simply wrong for your portfolio.
Learn from failures
It’s good to focus on success, but you must also learn from failure. We can sometimes be too quick to forget about our bad investments and remember the good ones.
However, this can lead to overconfidence. It’s better to analyse and learn from your mistakes than to dismiss them. It maybe that it was only one small aspect of a deal that scuppered its chances of success – the overall strategy may have been a sound one.
Admit you’ve made a mistake
Sometimes the problem lies in the fact that you haven’t acknowledged that you’ve made a mistake. This may lead you to hang onto a property investment when you should’ve cut your losses earlier.
The way to avoid this is to set performance milestones at the outset. This way, if you consistently fail to meet your goals at each stage, you know for sure your plan isn’t working.
Use common sense and know when to give up rather than sticking with something purely because you don’t want to admit defeat.
Be prepared to negotiate
The thought of entering into intense negotiations can be intimidating. But if you take the emotion away, it’s actually a straightforward procedure. It’s a question of setting parameters before you begin.
First, do your homework and decide what you want to pay or what you’ll accept as your final price.
Next, divide this into increments and go in with your lowest bid.
- As negotiations proceed, know when to stay silent. Don’t be tempted to justify your offer or explain why you’re turning down an offer.
- Stick to your predefined incremental stages. Don’t be tempted to overplay your hand. Only offer or accept what you’ve previously decided upon.
- If things aren’t going your way, don’t be goaded into accepting less than the amount you’ve specified or offering above your limit.
- This may result in you having to walk away from a deal, and you should be prepared to do this. More than anything else, this will give you the upper hand in negotiations.
If you’ve predefined and accepted all of these factors before entering into negotiations, then it becomes a much less stressful process.
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