I am not being rude but… “Are you a property idiot”?
Property idiots think property investing is easy but they don’t seem able to progress beyond average success. They find a property dream, and they always seem to turn it into a nightmare – or something close.
Is that you – or someone you know? Time to listen up!
1. Portrait of a property idiot
Some strong indicators of property stupidity or its onset include:
- Paying way over the odds for a property on account of not doing sufficient due diligence on its true value
- Jumping into a property partnership without thoroughly analysing the project and knowing chapter and verse about the joint-venture partner
- Signing up for an expensive property course or training on a whim without researching its track record, reputation or rating
- Taking out a wildly expensive bridging loan to fund a property project and not having a Plan B to repay the bridging loan in the event of some setback with the project.
A property idiot gets over-excited by the face value benefits of a property opportunity and dives in feet first, without proper analysis or due care and attention.
In their excitement to snatch big rewards, they recklessly underestimate big risks.
Haste beats common sense and greed triumphs over reason.
2. What causes property idiocy?
The main cause of property idiocy is probably over-confidence. The typical property idiot thinks property success is easy; such a viewpoint is not entirely surprising – there are so many “property experts” telling them just that.
What could be easier than finding a property, doing it up and selling it on for a tidy profit? What indeed.
I blame it on all that property porn always on our TVs. Over an hour or so, the viewer sees a successful property journey from start to finish – and they often conclude it is that short, that simple and that problem-free.
It is the case that some property strategies can be simple and trouble free, but property success generally involves negotiating a formidable obstacle course of challenges. Property journeys rarely go in a straight line.
Property idiocy if often rooted in:
- Under preparation or complacency
- A lack of time, money or knowledge
- Badly structured property goals or plans
- A lack of necessary expert advice or assistance
- Inadequate business accountability.
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3. The consequences of property idiocy
The most serious consequence of property idiocy is of course financial loss – often huge in nature. Here are a few examples of how property idiots can mess up big-time:
- A buyer impulsively decides to purchase a property at an auction without having the cash or a mortgage to complete the purchase and ends up being unable to complete. Consequence – loss of the 10% deposit paid, wasted legal costs and the risk of being sued to complete the purchase.
- An owner foolishly decides to convert a house into flats without gaining the necessary planning permission. Consequence – service of an enforcement notice, unnecessary legal costs and the risk of penalties and having to re-instate the house.
- A buyer rashly agrees to buy a new property off-plan without putting a cast-iron plan in place to provide the balance of purchase price when the property is physically completed. The buyer is unable to secure funds to legally complete the purchase. Consequence – loss of deposit paid and wasted legal costs plus the risk of being sued to comply with the contract.
4. Cures for property idiocy
Fortunately property idiocy is not incurable. However, the precise cure for each person will of course depend on the particular causes. Here are some common causes, along with some helpful antidotes:
Over-confidence – take expert and experienced advice before embarking on any property goal, plan or project; assume everything will go wrong and apply the maximum level of caution, prudence and diligence accordingly.
Lack of knowledge – get adequate property knowledge from course providers, mentors and advisers with a proven ability to educate to a high standard; max out on self-education.
Lack of experience – hire a first rate mentor, trainer or consultant or team up with a joint venture partner with a good track record, experience and expertise in the property plan, strategy or venture to be pursued.
Lack of money – respect financial and budgetary constraints and avoid the temptation to try and grow too fast, too large, too soon; buy only what you can be comfortably afforded – keep envy and greed permanently under lock and key.
Lack of accountability – find a top-notch, no-nonsense accountability partner or business partner qualified and/or experienced in the precise property strategies or projects being pursued; when in doubt always seek a second opinion.
5. Property idiot to property genius
If you are ever afflicted by property idiocy and you manage to survive its damaging effects, you are likely to build up a strong degree of resistance to a repetition.
Instead of causing permanent damage, the experience could make you immune to countless serious property errors going forward.
Far from being a property idiot, you can readily transform into a property genius! But that is the topic of another blog…coming soon!
Rebel Property Coach
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Categories: 08 Mindset