24 Aug Balanced portfolios & Dangerous positions
Earlier in the week we wrote an article about the importance of having a balanced portfolio,(link) and it is true that a property investor should focus on quality and quantity of their investments, and make sure there is a plan for any likely eventualities, and contingencies in place for the unlikely. However, there is a far more dangerous position to be in than not having enough width or depth in your portfolio.
Not having a portfolio at all.
We often speak to people who are looking at buying their first home and have been for a long time. Buying your first home is by far the most difficult part of creating a property portfolio, because it seems so alien when you haven’t done it before. Speaking to real estate agents, dealing with financial advisors and signing contracts that look like books aren’t the usual things that people do.
Also, buying your first home can be scary. I remember thinking about whether I was making the right decision, or if I knew enough to make one at all. You ask yourself of the property will go up in value, and if your family will love living there. You think about whether you’ll be able to sell it in a few years, and if there will be any additional cost over what your budgeting for.
We talk often to first home buyers who come to us because they want advice, but often what they really need is a caring push.
You can do that yourself.
Think about whether, as a first home buyer, you will regret buying the house, or not buying a house. What will your circumstances be in five or ten years? What if you never act?
If you start the journey towards homeownership then I have to assume that you want a house. It’s easy to avoid making the final decision through justifying the reasons why each house isn’t, “quite right.” And we deal with people everyday to will make excuses for years and years, and those excuses may end costing them far more than just equity lost while they delay.
There is no right or wrong in property investment. Every action you take has consequences, and every action you fail to take has consequences also. A good investor will know what type of property fits well into their portfolio, and be able to act on it quickly, because they are experienced in the process and their fear is lessened as a result.
Your first it will be scary, but it will be worth it, if that’s what you want.
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