Investing in property may sound tempting especially when you heard about successful investor who have become rich. However, success is not something you can gain overnight. Many of successful investors spilled blood, sweat and tears for many years before gaining their success in property investing.
This shows that investing in property has its own risk and weigh you should consider before taking any action. It doesn’t mean you should not investing in property. However, being extra thorough throughout the process won’t hurt either.
3 risks of crowd-following investing
It is like a nature to follow the majority because it causes certain excitement. For example, you will feel delighted when you are in the middle of the crowd during a festival or music concert. The hype and adrenaline seems to bust your energy surrounding you with optimism and positivity. However, the crowd in property investing is not always positive. It can lead to negativity as well. Thus, you need to be aware of the risks if you follow the crowds when it comes to investing in property. Here are things you need to know about it:
- One of the reasons why investor tends to follow the crowd is because they thought the others have done their research and preparation. Then you will believe that your burden will be lifted and your risk is reduced. However, it is not like that. There is no change of your risk in property investing even when you follow the hype of the others. You have your own risk that should make you be wary and prepared. Thus, you should not just follow a crowd of investors who choose certain location to invest. Take your own calculation so you can minimize your own risks.
- Those who tend to follow the crowd in property investing are often the new comers. Since they are new in the industry, they have a need to feel safe somehow which end up in following the crowd instead of doing their own due diligence such as research. The hype or excitement of the crowds often caught new investors to make decision. However, making decision solely based on the excitement coming from the crowd is not a wise thing to do. You need to rely more on your own research so all information and data you collect will be reliable to help you make wise decision.
- One of the situations in which most investors are caught in the crowd is during bidding. The buzz of energy and excitement during bidding sometime can overcloud your judgment. It is not impossible that you end up buying overvalued property. However, it is not a good idea to lose your guts in investing just because you are afraid of making mistakes. However, it is wise to not follow the crowds blindly when it comes to property investing because it only increase the risk of failure. The best thing to do to be successful is doing your own research, seeking advice from professional and have self-discipline in doing your due diligence no matter how insignificant it seems.
