Is successful property investing an art or a science?


Investing in property isn’t as straightforward as you might think, and if you don’t do it right, it could end up costing you a fortune.

I always say: “Don’t let your emotions get in the way of your property investment decisions.”

In fact, of all the common mistakes property investors make, this is where most of them go wrong.


Instead of undertaking appropriate due diligence by looking closely at property data, many investors are making emotional purchases and it’s causing poor decision making.

They’re buying where they live, where they want to holiday or retire, or even buying the type of property they’d like to live in.

That just doesn’t make good investment sense, does it?.

So what does?

Over the years I’ve found that investors tend to fall into one of three main categories, which led me to question if one style of investing is more successful than others.

What type of investor are you?

So, let’s look at the three types of property investors.

1. The passive investor

A passive investor tends to spend little time doing any due diligence and is keen to buy one of the first properties they come across.


They aren’t really interested in understanding all of the ins and outs that go along with creating a property portfolio such as finance, tax laws, compounding, and so forth.

Instead, passive investor tends to let their emotions get involved in their investment decisions, which we know can lead to disastrous results.

2. The active investor

An active investor puts in some degree of work in order to find a good investment prospect, including conducting some due diligence in the hope they can increase the likelihood of making a good and viable investment purchase.

They generally look to gain a basic understanding of the principles involved in property, finance and taxation and would look to seek professional advice for help with structuring a portfolio.

3. The analytical investor

An analytical investor is the far extreme of a passive investor.

Instead of undertaking little research and due diligence, this type of investor tends to go overboard and spend months, or even years, examining data, seeking advice, and reading material in order to look for the ‘ultimate’ investment property.

While it may seem that an analytical investor is more likely to make successful investment decisions, it’s actually not the case.

Below you’ll find out why.

The problem with property data

There’s no doubt that it’s important to understand the property fundamentals and research appropriate and reliable property data, and the more extensive the data research is and the longer it goes back, the more accurate it is in forecasting future trends.

But the problem is, that data is often wrong.

Unfortunately the most commonly reported data – median price data – is actually very unreliable.


There are three reasons:


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