Head or Heart?
Are you making decisions with your head?
Or with you heart?
Naturally, we all have decision making styles;
Gut feel/intuition
Research based
Based on advice from friends
What has worked in the past
What others are doing
Layer over this the fact that our level of knowledge around a situation also influences how we make
decisions
See below: the ‘Dunning Kruger’ effect
Basically, you don’t know what you don’t know
It’s a cognitive bias that basically suggests those with a low understanding of something overestimate
their ability
And those with a high understanding, underestimate their ability, as they know how much they don’t
know!
When meeting with clients to discuss property purchases we see something similar - where a little bit of
knowledge can create confidence
What we call "the head versus heart dilemma”
It’s a lens that many people naturally use to make decisions
A head decision is based on the numbers, facts, figures, do the financials stack up - this is naturally an
investment property
A heart decision is based on how you feel when you look at the property, how it makes you feel, how
close it is to family and friends, no mention of the financials - naturally, this is a home
A heart example;
On the coast
Near my home town
A character property
Walking distance to the local pub
A quiet village away from lots of people
4 beds for when I have friends come to stay
Open fire place
Thatched roof
Need to drive there
Lots of land
Would this make a good investment? Not really.
Not enough employment nearby for people to want to rent
A very niche property, not that many tenants that it would suit (small tenant pool)
Lots of upkeep
Low yield
Now, a head example;
City centre
Near large employers
Near to a gym
Near to a few good pubs and places to eat
Transport link, bus routes, trains
Brand new (low upkeep)
Amenities (gym, co working space, etc)
Fun things to do
1 or 2 bed flat
No garden for upkeep
Low maintenance
Would this make a good heart purchase? Yes, it could well do for some people
Would it make a good investment purchase? Yes
Heaps of employment, lots to do, easy transport
High yield, minimal upkeep
Therefore the potential tenant pool is much higher
When making decisions around property this is what we must consider
We must take our own emotions out of it
What makes a good home for you does not necessarily make a good buy to let
Remove your gut feel, your emotions, your feelings
Make decisions based on facts and figures:
With your head
Think a friend would like this? Send it their way
Have a great weekend ahead,
Callum