For the last few days I sat analyzing some potential property propositions and found something that really attracted my attention. It was very close to a very busy train station and I thought that the "unfortunate" people that live near the station really have a problem. Nobody, but nobody, would be interested in buying their properties from them as the streams of people coming from and going to the station leave them with absolutely no privacy and with constant risk of security. That is a fact as sure as a house, I thought to myself.
I then felt quite confident when I decided to approach them with the concept of selling their properties so that a developer could then establish a high security complex at that location. I sincerely felt that these "unfortunate" people would view my advance as a visit from heaven. A saving angel in the form of a gray haired middle aged man!
I thought on my way to these "unfortunate" people that they would not be able to sleep after I, the Don Quixote, had offered them prices way above the average for the area. And I, a modern Robin Hood to the poor people, thought that before this, they would not have been able to even give those houses away to any one.
And now for the real result... A very happy looking man opens the door to my knock, listens to my story of an early Christmas and then goes ahead to decline my great offer. May I quote him verbatim? "Why would I want to sell as I am less than 50 metres away from the station?." He clearly had a different view on the basic tenet of property buying, that POSITION is of utmost importance!
Shaken into cold shivers on strength of this encounter, I approached a second house in similar POSITION to the previous one. An overtly aggressive lady opened the door of a house with almost no furniture in it. She firmly declined my offer as well. No kidding! I realized that she was busy fighting a different demon at the time and that I represented something that was at least visible to her helpless mind.
In my "dog with a disillusioned tail" way, I left that landscape that adheres to a completely different drummer, trying to make sense of that encounter. My reasoning then started to calm the emotions of a monstrous inferiority attack.
The bottom line is this: people tend to let their emotions run their lives. This is good when it comes to marrying the girl of your heart. It is bad when it comes to decision-time on buying or selling property.
Do not buy property only on the strength of your heart! As a young man, centuries ago, I listened quite carefully to good advice to buy the cheapest house in the best of areas. You could not get it better in those days than a location in Bishopscourt, Cape Town. I, with splendid detective work, found the cheapest house in the whole of Bishopscourt that was for sale. I very almost bought that cheapest house in the whole of Bishopscourt because it was cheap and because it was so extremely cute. Luckily, when I drove past it for the thirty third time or so, just before signing the contract to buy the cheapest and cutest house in the whole universe, I suddenly saw that this quaint house was tilting to the right. Yes, quite right, it was tilting to the right! It was busy sinking into the earth starting from the right side of the house.
The bottom line of this story? I used my logic in a warped way in buying property at that time. POSITION is very important in a decision to buy property but there are many other factors to consider logically before one makes the purchase. Most importantly, watch out how your emotional cravings colour the so-called logical approach during decision time. Do not discount the emotional aspect in anything, because it should form part of a well rounded approach, but do not let it overrun good judgment.
It is even more important not to think with your heart when you buy property for investment purposes. It does not mean if you don’t want to live in a house or apartment for some reason, that it should not be bought for investment purposes. That is emotion that is talking there, not economics. Investment property should all be about return on capital, growth etc. Take your time with considerations. Let them sink in. Stand aside and watch from different angles. If it keeps on saying "yes! yes!", then act on it before someone does his/her homework slightly faster than you.
Opportunities come like the waves of the sea. You get good waves and you get mediocre ones. You can only surf the right wave if you have spent time getting to know the essence of waves. Do not act like a surfer - be one.
Use your logic to full capacity in assessing property opportunities in practice runs before you jump into the waters of turmoil. When you’re in it, you either surf because you know how, or you feel you know how and sink!
Wim van der Walt
17 May, 2007
