Real Estate Investor Magazine South Africa October 2014 | Page 24

GETTING STARTED

BY JASON VORSTER

Getting
Into The Game
How to avoid analysis paralysis

E

motion and logic each have a role to play in
decision-making, whether personal or business.
However, if you want to become a successful
property investor, it’s vital to you have a practical and
logical system in place that allows you to make good
decisions based on the facts. But beware of ‘analysis
paralysis’; many deals have fallen through as a result of
investors being unable to make a solid decision.
Overly analytical people will scrutinise a deal beyond
what is necessary, which is when analysis paralysis
happens. Buying a property for investment is never
perfect, but analytical people can have a problem with
this. They can often suffer from the fact that real estate
involves both give and take. Often, they never get into
the game as they strangle property with their own
reasoning before they even get started.
Diagnosis
The core symptom of analysis paralysis is the basing of
your decisions purely on emotion and the small things
that can be changed such as fittings etc, or burying
yourself in facts and figures. You might never find the
perfect investment, but by bringing yourself back to the
reason for seeking an investment you will find a near
perfect one.
Treatment
If you find yourself in this state, you need to set out
clear goals and objectives and ask why you want to
make this investment: is it to be an owner-occupied
unit or is it purely for rental purposes? The answer plays
an important role in the decision-making process and
will have an effect on your final decision. If you plan
to live in your investment, your emotions will play a
pivotal role when purchasing. However, if this is an
investment property you need to have a completely
different mindset. Your decision will be based on facts,
figures and the return on your investment.

24

October 2014 SA Real Estate Investor

BASE YOUR DECISION ON
FACTS AND LOOK AT THE RIGHT
FIGURES.
• Is it viable?
• Is it the right price?
• What is the average rental in the area?
• What is the expected capital growth?
• Are the returns realistic?
• Are the returns what you expect?
• Do the returns make your investment worthwhile?
• Is there sufficient infrastructure in the area you are buying?
• Are there any future plans/extensions for the area?
• Is there a high rental demand in the area?
• What are the expected management and maintenance costs?
• What are the current market trends?
• Does it add to your bank balance or take away?
And, finally, don’t over-analyse things like tiles, counters
etc, because although these do make a difference, they
can be changed over time and should not be a reason
to stall your decision and possibly losing out on a good
investment.

RESOURCES
Just Invest
www.reimag.co.za