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Property Investing - Am I Buying for Profit or Prestige?
All of us have emotional preconceptions and assumptions. They are reinforced and fine tuned by our experiences of life, be they traumatic, disciplined or consistent. Our brains are designed so that the emotional patterning centers mature while we are still in utero, whereas our rational centers begin to mature at about 4 years old and finish maturing through adolescence to early adulthood. Non- rational emotional patterning is therefore a design feature!!
Most of us have some common preconceived ideas, historically these were things like the earth was flat, and we couldn't fly. Now they are more likely to be about how we structure our lives.
Why do over 3 million people in Sydney need to get up and go to work at the same time, every day and cause massive traffic congestion? Why do we think this is normal? Is it normal? Does it work for us? Why do we keep doing it?
As well as commonly held patterns we all have a few family specific ones and, a number of which are unique to our experiences of life. Because they are a design feature, they are supposed to be there. Most people seem to presume not and try to weed them out or ignore them and hope they will go away. However, a big property purchase looms. Our money is involved. For most people our emotional patterns will be triggered and we will react. The issue isn't that we have a reaction, the issue is the reaction becomes our focus and we try to fix our upset. In the process we forget to focus on the property transaction!
Property transactions are very complex procedures with finance, legal, vendor and purchaser coordinating to a finite window. Much expertise and sensitive negotiation can be involved. There are few opportunities we participate in with a more immediate effect on our bank balance, cash flow and, for many, sense of self. This is not a good time to be distracted!!
What are the sorts of things that distract us?
We could look at many behaviours, however we get simpler pictures if we examine motive, sometimes conscious, sometimes hidden a little deeper. A client might be worried about how they are perceived. Property becomes a tool to prop up their perception of themselves through others thinking more highly of them. These are often people who love to drop property reports into general conversation. Hoping to snare some self esteem through others' reactions.
These people buy for prestige rather than wealth creation. They want an address and landmark that their mother-in-law, social set and the boss approves of and almost envies. Glossy prestige marketing lures them to overpriced deals that fail to capitalize to expectations. They may go sour on the concept of gaining wealth through property and find some other way to prop us their image. However, did they ever really look at property with open eyes to examine the business of creating wealth?
Other clients are more concerned about doing it the right way. Hence every detail must be managed. They find professionals who do things their way and then collude with them about the rightness of the way they do things - a very circular way to complement yourself! Because of the level of detail required, due diligence takes on gargantuan proportions. Many deals are missed. Costs rise as professional are paid for their expertise.
In their frustration, they may find a guru, suspend disbelief and follow their advice. Often this is more in line with their perception of the gurus qualities than the particulars of the property acquisition. Did they ever really go to find property or were they looking for the right way and property was just a thing to do to find it?
These two examples sound extreme and yet are very common. Money is one of our great human experiences. It draws out of us unknown or unrealized assumptions about who we think we are in relation to money. Some of this is great and some of it is self limiting. To be in the business of wealth creation, wealth management, asset retention and cash flow management we need to be willing to make our property business the priority and give up a few of our emotionally patterned preconceived ideas. This is not a job for the faint hearted.
Rosemary Johnston of LeadershipFirst a First One Pty Ltd Business. Rosemary provides coaching and facilitation services plus leadership development workshops to the Executives of some of Australia's Leading companies. Her web site is http://www.leadershipfirst.com.au. Rosemary is also an executive member of the Property Investors Association of Australia http://www.piaa.asn.au/ for more information on property.
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