Today I’ll share with you why it is important to know your WHY before buying real estate and how that can assist you to build a property portfolio to achieve your financial and life goals. I often get asked “Should I buy the house with the red roof or the house with the green roof?” and my answer is short and deliberately for effect: How should I know? The reason I do that is because I want them to understand that to buy the house with the red roof or the green roof is irrelevant until they know their WHY, their purpose and the outcome they want to achieve with their property investment.
Begin with the End in Mind
In Stephen Covey’s book ‘The 7 Habits for Highly Effective People’ – habit #2 is: Begin with the end in mind. Covey says, “If your ladder is not leaning against the right wall, every step you take gets you to the wrong place faster.”
If you haven’t thought through your purpose for wanting to invest in property, your outcome or your WHY, you run the very real risk of making spontaneous investment decisions which are emotionally driven or may even be based on the wrong advice. Your WHY is your guiding star. Every decision you make in building your portfolio should be in alignment with your end goal. Your WHY should be the underlying driver in your investment strategy.
Your WHY of Property Investing determines your personal Strategy
It’s important to recognise that a strategy that is right for some investors, may not be the right strategy for you. Once you are clear on your WHY, you will be able to determine whether your strategy should be based on Cash Flow, Capital Growth, Value Adding or a mixture of the above.
Finding the right property isn’t as easy as just going to a real estate website or sales agency and selecting a property you like. If you don’t know your WHY, finding the right property can more feel like looking for a needle in a haystack. There are literally millions of properties out there for sale but if you are clear on your end goal and your WHY you will be able to say NO to most of the properties on the market as well as recognising when you finally find the real deal. Property purchases are big financial decisions that effect you for a long time. Buying carelessly and without the right strategy in place, can mean the difference between building wealth and financial freedom or creating a financial disaster.
Does your existing portfolio align with your WHY in Property Investing?
If you already have a property portfolio that you created without your WHY in mind, now may be a good time to think about your WHY, build your strategy and compare the properties in your portfolio. Do you have any properties that don’t align with your overall strategy? Now may be the good time to replace them with a property that is better aligned.
So here is my answer to the question “Should I buy the house with the red roof or the house with the green roof?” It depends on your WHY. It depends on your circumstance and on the outcome you are looking for. Only you can make that call. And when you are clear on your final outcome that decision is easy.
To help you discover your WHY we have put together a worksheet with three questions that we find you need to answer to become clear on your WHY. Just click the link below , enter your name and email and you should find the worksheet in your inbox straight away.
Next week I will be looking at the WHAT of property investment. I look forward catching up with you soon.