Most people considering investing in property would claim they’re driven by solid reason, rather than emotion.
But according to Allister Lewison, co-founder of OpenCorp, sentiment can creep in and influence the most rational of would-be investors – and even those who have invested before.
“It’s really hard to prevent emotion from clouding your judgment,” he says.
“The reason people let emotion get involved is because their initial motivation for doing something can have an emotional factor behind it, so when they’re making decisions it can get quite easy to jump in and make it for emotional reasons.”
Whether it’s a desire to provide a better future for their family or to semi-retire at an early age, Lewison says the majority of property investors aren’t driven by the need for a bigger bank balance, but rather by the personal opportunities investing allows.
Lewison – who has helped everyday Australians amass over $200m in property – says one of the most common emotional mistakes he sees is investors taking advice from unreliable sources.
“They go to the family barbecue and their uncle who has never invested in his life is giving them advice. You’ve got to be really careful about where you’re taking your guidance from, because that can absolutely lead you down the wrong path,” he says.
Another major emotional barrier arises when investors have an attachment to their local area.
“People think. ‘I know the local area, I like where I live; I’ll be able to drive past and make sure the lawn’s being mowed’. That’s being emotional about your decision,” says Lewison.
“It’s about people wanting to look at it and touch it, but these aren’t the right reasons for buying a property. The chances of the best investment for you being three doors down from your own house are like finding a needle in a haystack.”