Don’t be a sheep, be a shepherd: Damian Collins

GEUST OBSERVER

At a time when there are stark differences in the performance of various property markets around Australia, investors need to remain level headed.

Many property investors are all too easily swayed by what everyone else is doing.

Whether it be their friends, family or colleagues or what they’ve seen in the media, many investors will feel a need to do as other do, in other words, follow the pack.

While I won’t go into the reasons behind this behaviour – I’m a qualified accountant not a psychologist – to me it’s absurd to largely base your investment decisions on what others are doing. 

Right now, the property markets in each of Australia’s capital cities are recording quite contrasting performances.

Indeed, Sydney and Melbourne are experiencing substantial capital growth while prices in other cities, such as Perth and to a lesser extent Brisbane, have remained fairly subdued.

While there a number of factors that need to be taken into consideration when purchasing an investment property, one of the fastest ways to diminish your wealth is to overpay for your asset. 

Investors typically overpay during a boom market, when confidence is high and there’s no slowdown in sight.

On the other hand, significant profits can be made when investors buy during a flat market and capitalise on the ensuing upswing in prices.

This is simply counter-cyclical investing – buying when everyone else is selling and selling when everyone else is buying.

While ebbs and flows will always occur in property markets, investors need to remember two things.

• Wealth creation through property investment is a long-term strategy 
• Investing at the wrong time can significantly set you back, while purchasing at the right time can give you a massive boost

Unfortunately, many property investors often get caught up in the hype and become followers, instead of leaders.

Damian Collins is the founder and managing director of Momentum Wealth and can be contacted here.