Eight years ago I completed a Psychology degree, various parts of which consistently help me in my understanding of individuals, society and property investing.
People often like to think that they are non conforming individuals, however studies show us that most of us conform our money and investing habits to that of our parents or the people around us. Asch identified that humans will often 'follow the crowd', even when they know they are not making the correct decision, in an attempt to not stand out as being different. Getting results that no one else gets requires doing things that no one else will do.
The Stanford University Marshmallow Experiment (Mischel) involved children in a controlled environment being given a marshmallow. If they could delay eating the marshmallow until the experimenter returned (normally 10 - 15 minutes), they would receive a second marshmallow. The study identified that children who could demonstrate delayed gratification with a marshmallow, would grow up achieving more and being more successful. The recent success of Scott Pape's The Barefoot Investor and the popularity of credit cards and afterpay, demonstrates that for many adults, delayed gratification is not a skill they have developed.
Psychologist Sigmund Freud developed the psychoanalytic theory of personality development. Freud suggested that personality is formed through conflicts among three fundamental structures of the human mind: the id, ego, and superego (imagine three different Jiminy Crickets on your shoulder telling you what to do). The 'id' is reminiscent of a tiny baby who identifies what they want, and expect it immediately. As we grow, we start to develop our 'ego' which identifies that while there might be something we want, we need to wait for the appropriate time or situation for it to be possible. The 'superego' is the moral compass of the group, reminding us of society's and our own values and expectations.
In property investing, understanding the id, ego and superego is extremely significant. In any deal or investment opportunity, you will have the desire to jump straight in and get the property. It's good to not hesitate when you identify a property that suits your criteria, as a wise person once said "you snooze, you lose". At the same time, the deal needs to make sense as part of your long term plan. If the numbers don't add up, you've compromised on too many aspects of the property, or if your due diligence criteria isn't met, then perhaps it's not the right time or place.
Perhaps you're looking at the property market and thinking that investing is out of reach, or that you want your dream home and you want it now? Perhaps your 'id' is telling you that you want it now, but your 'superego' is telling you that, based on the banks criteria, it's out of reach? Maybe your 'ego' (your compromise between the id and superego), could be to do something now, that will mean you can achieve your goals in the near future? For me and many investors, buying property in regional NSW has been the step towards our investment and life goals. Investing in regional NSW property can be done on an average income, with an achievable deposit, to provide good growth and cashflow every week to keep you from being out of pocket.
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We are property investors who have, over significant time, seen regional markets out perform the capital cities in terms of cash flow and growth. We are writing to inform others of the potential that lies in regional property, particularly over the next 10 years.
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