Throughout my many years of working in the property industry, I have come across any number of investors, from complete newbies, all the way through to the highly experienced. One of the very first questions I always ask my clients is “What type of property investor are you?” Why? Because it’s essential to understand your current circumstances in order to help you make the best property decisions for YOU! Remember – there is no one-size-fits-all approach to investing.
Understanding what type of investor you are is essential for you to then identify the most effective property investment strategies to use for your circumstances. The strategy you choose needs to be aligned with your risk profile, capabilities, the available time you have and the financial and personal goals you are trying to achieve. Once you understand what investor you are, you’ll have a clearer understanding of what properties are best suited to you.
To help identify the type of investor you are, I have developed 5 Investor ‘types’ – check them out below!
THE FIRST TIME INVESTOR
As a first time investor, you are unsure whether to take the plunge into property and are often extremely apprehensive about making the wrong choices. Despite this, you are super excited and want to get going! Financing your deposit can be a problem sometimes, and you often seek the help of your family to help a little for your first purchase. You don’t have the experience to be 100% confident in your choices so you are often seeking advice from others and have an aversion to Interstate investing.
You possess a qualification and a network of tradies that give you the ability to add value to the property. As the name suggests, this isn’t your full-time employment, so you can focus on quick reno turnovers, utilising untapped equity within a property.
Your motivations are usually that you don’t like your job, or you see people who appear to be making good money through property. Because you are such a driven person you will do anything to get ahead financially. You learn on the job and are all about project management as you up skill. Be wary though – this time of investor often underestimate the time involved and the cost overruns.
THE PASSIVE INVESTOR
As a passive investor, you do your numbers and research and invest in a hands off approach. You use your skills in asset selection, meaning you reap the rewards for this skill without much “active effort”. You may not get the immediate returns that attract “active’ types, but you don’t take on the increased risk.
THE PURE INVESTOR
You are time poor and want the whole investment outcome to be outsourced, or you impulse buy without professional help. Usually, you are a higher net worth professional who can afford the risk, but not always. Sometimes you can be less willing to take good advice, because as a successful and intelligent person, you “think” you know a lot about everything. Unfortunately, your overconfidence and sometimes impatience can lead you to change strategy or tactics too often.
So there you have it! The 5 most common types of investor. Which one do you think you fit into the most? Sometimes you may be a cross between two…. Let me know in the comments below which one you think you are!
Until next time,