When it comes to property investing, you’ll most likely have a ‘style’ of investing … and you’ll fall into a ‘type’ or category. This shouldn’t be surprising for you given that we’re almost always stereotyped within our lives in some form or another. Sometimes it’s accurate and other times it’s way off the mark. When it comes to property, your ‘type’ will be linked to things like the level of risk you will take, what you’re capable of, how much time you have on your hands and ultimately what you want to achieve through building your portfolio.
None-the-less, don’t take it too seriously but be mindful of the type of investor you are as this will then have a flow-on effect as to the type of strategy you implement when it comes to your investing. Knowing your own style AND the other style of investors that are out there will help you to be less shocked when you come across their personalities in the investing arena. They are essentially your competition when it comes to buying the property you want, so understanding their angle will be very beneficial!
Let’s take a look at the various styles of investors:
Most people start out just wanting one property and a lot of the time they buy that one investment property in the same way that they would buy their own home – with emotion. They tend to buy something that is close to where they live, where they work, or where they want to retire (all emotional reasons).
They do a little research and crunch some numbers but are hands off for the most part. They’re not really interested in understanding all the details or consulting any experts, so they generally buy one of the first properties they find. Unfortunately, it’s likely that they’ll regret buying it, have trouble holding on to it and sell it within a few years.
This type of investor puts in a little more effort when it comes to finding the right property.
They want to make a good investment so they are willing to find out the basics about investing and they are also open to talking to the professionals about how best to structure their portfolio to get the most out of it.
The ‘Project Purchaser’
This is the type of person who is wanting to make a change. They may have friends or family who seem to be making some good money investing in property so they want to give it a go as well. The Project Purchaser is smart and is prepared to do anything to make a difference for their financial future. They jump in with both feet and learn as they go. The only downfall is that because they jump straight in, they often underestimate the time commitment that is needed and the costs involved in a property purchase.
The ‘All In’ Investor
This is a full time gig for this type of investor. They will usually have some kind of background in a trade or are actively working that trade. Developments are the main focus for these investors and they earn significant money managing and working these projects. This type of investor can’t do it without a team of experts behind them which has been built up over time.
The ‘Weekend Warrior’
Similar to the All In Investor, the Weekend Warrior also has a set of skills and lots of friends who are tradies that gives them the ability to add value to a property. As the name suggests, this isn’t a full-time job for them, which means they focus on quick reno’s to build or increase equity within a property. The benefits for this investor is that they can keep costs down by doing some of the work themselves or using one of the many trades men or women that they know.
For someone who is time-poor but still wants to buy property, this type of investor generally outsources everything. The difficulty is that sometimes they can be demanding, outspoken and expect results over night. And sometimes, they will make a quick purchase just like they would with a pair of shoes! Sometimes their stubborness means they aren’t willing to take good advice from the professionals, they think they are right all the time, and because they don’t see results immediately, they tend to change directions all the time.
The ‘Cautious Investor’
Naturally they are cautious with their money which means they are likely to make an investment that is a lot less risky. It often takes them a while to actually decide to buy a property, and when they do, it may not necessarily be one that will give them the best results. Lots of research is involved but you’ll find that they won’t venture much further than the suburb they live in. This type of investor is definitely thinking about the long term future and is happy to wait for the property to increase in value.
The ‘Assertive’ Buyer
These investors are out to make money from the get-go. They are switched on when it comes to investing and they are prepared to take on a lot of risk with their purchases. Sometimes the risk will pay off and sometimes it will cost them dearly. This investor loves the rush, the thrill and the gamble involved and they want fast growth over a short period of time. This style of investing is definitely the minority group as they need to have capital to fall back on if things go wrong.
There is such a thing as doing too much. These investors will spend months and months (sometimes even years) researching, examining and comparing property sales and values. They are constantly seeking advice from the professionals and after doing all of that, it takes them just as long to actually commit to buying anything at all. They are wanting to find the ‘ultimate’ investment and they will waste so much time believing that it actually exists.
Do any of these personality traits remind you of yourself?
You may not be defined by any one of these ‘types’ but may find that you are a mixture of several of them. This means that you’re likely to be a balanced investor and your portfolio will be made up of a variety of different properties which will provide you with both short term and long term benefits.
For me, I’m not any one single ‘type’ of investor and I definitely have personality traits of many of the styles listed above. I have big goals when it comes to property investing, but I won’t go into any deal without doing my homework and knowing the risks. This cautious side of me, combined with my some-what assertive nature and ability to outsource when needed, means that I have a great portfolio made up of many different types of properties that all serve a different purpose.