Three Types of Property Investor – Which One Are You?

Last Thursday I attended the property millionaire network conference. It was a fantastic event and it was good to catch up with a few friends that have been investing in properties for the last ten years.

I knew them at the start of their journeys when we only had one property to our name. Now, it is astonishing what ten years of consistent property investing can achieve.

We engaged in numerous conversations about the state of the market and even had a small bet on which one of us would increase our property portfolio to the next million fastest.

As the evening went on and drinks kept flowing, the conversation surrounded what we call the three main types of property investor.

Could it be that your property investment success is based on the type of investor that you are – and if you are unfortunate to be the wrong type of investor, are you doomed to failure?

OK, let us start by reviewing the three main types of investor profile.

The Passive Investor – Tom

Tom is a quick mover and does not have any interest in understanding the fundamentals of successful property investing, such as strategy, diversification, finance, portfolio building and taxation. The worst part is that Tom will invest in the first property that comes his way – without conducting any due diligence or talking through the investment strategy with industry professionals.

When it comes to using professionals like a lawyer to check through the legal security of the property – Tom is likely to be penny wise and pound-foolish. He will joyfully tell his mates down the pub that he saved £2k by doing the legal work himself. However, his lack of legal experience means that he is likely to have left himself exposed.

Tom a “Passive Investor” is typically relying on luck. Now – if luck does not come his way and the investment becomes a burden or failure, then you can expect every cat, dog and mouse to be blamed for his misfortune!

The Active Investor – Maria

Maria is prepared to spend a little time to research and understand what will make a great investment opportunity. She will gain a basic understanding of the fundamentals of property investing, such as strategy, diversification, finance, portfolio building and taxation.

Maria will speak to her property consultant, in order to create a robust strategy for portfolio building and conduct thorough due diligence so that she can mitigate risk and increase her chances of becoming a successful property investor.

Due to her prior research and preparation, she knows exactly what she is looking for and when she finds it, she moves incredibly fast to secure her investment.

The Analytical Investor – Edward

Edward is a student of detail. He will spend many long months, sometimes even years, analysing every area of the property market endlessly comparing values and sales, reading reams of material regarding real estate do’s and don’ts and seeking advice from as many experts as possible before committing to anything.

Edward will certainly have all the due diligence work ticked off as he searches for the “greatest ever property investment” opportunity the world has ever seen.

The likelihood is that 4 years from now, Edward will still be reading reams of material regarding real estate do’s and don’ts, without actually using this knowledge to step out of his comfort zone and make an investment.

So, could it be that your property investment success is based on the type of investor that you are – and if you are unfortunate to be the wrong type of investor, are you doomed to failure?

Well if you are “The Analytical Investor” then there is a big possibility that you are doomed to failure, purely because you are consumed by an ocean of fear that is keeping you tied to your comfort zoned. So you may never ever make an investment.

Even though “The Passive Investor” could end up losing his shirt – due to his lack of research and preparation, his chance of success is still greater than “The Analytical Investor” because he will take action. In a nutshell, he is on the playing field and could score a goal or two.

In my humble opinion, “The Active Investor” has a good balance between doing the research that is required, consulting professionals and taking action. I would say that if you are “The Active Investor” your chance of property investment success is very high. If you are one of the other two, then it may serve you well to start bringing in some of the characteristics of “The Active Investor” into your property game plan.

I would love to hear your comments and feedback below.

Thank you and you go out there and make it a great day!

Loxley McKenzie
Managing Director

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