190: Leaders and Managers – the psychology of investing
04-18-2008
There are two key threads of making money out of property. One is to buy and sell – sometimes quickly doing up in the process. The other is to manage properties or a portfolio in the longer term. They require different skills and different psychological traits. If you do an analysis of which type of traits you have, this can help steer you towards the line of property investment business that maximize your value and skills – you will find you enjoy the work more if you are in a domain where you maximize your traits.
We have split them into two key categories. Please be aware, anyone that makes serious money from property investment is either a manager or a leader – if you are not, you will not even start property investing! If you have a full time job as well and are neither called a manager or leader – please ignore this. Practically all people who make money from property are doing this because they manage or lead!
Leaders
Traits
· Impulsive - liable to jump in – lower analysis and fast decision making
· Focus on big picture – trends
· Tends to be trusting and not very skeptical
· Does not like detail
· Independent minded – leading from the front
· Likes starting things, does not like finishing
· Often extrovert
· Often warm character
· Good at quick high level analysis and numbers – often bi-sects processes and systems
· Challenging
· Will tend to go it alone
· Liberal, adventurous
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Traits most suitable for the following in property investment
· Land acquisition and sale
· Development ideas, opportunities, planning phase
· New business – opportunity identification and generation
· Buying properties – quickly building a portfolio
· Ideas generation
· Flipping property and quick-fixes
· Delivering high capital gains in short period of time
· Thrives on taking risks
· Likes to avoid tenant issues – believe more important things to work on
· Likes to avoid maintenance issues – believe more important things to work on
Managers
Traits
· Not impulsive – rationalizes things before decisions – high degree of analysis and slow decision making
· Focus on details and skeptical of the value of longer term trends
· When seeing an opportunity, thoroughly analyzes before pursing – not scared to walk away
· Tends to be distrusting and skeptical
· Likes detail
· Can be independent or relying on teams – a follower
· Likes finishing things, not so keen on starting things
· Often introvert
· Often cool character
· Good with analysis, numbers, rationalizing, economics, processes, systems
· Likes to build aligned view
· Conservative, cautious
Traits most suitable for the following in property investment
· Development execution, building, finishing projects
· Existing business maintenance
· Due diligence
· Buying properties – quickly building a portfolio
· Ideas review and rationalization
· Maintenance of property
· Management of property
· Managing tenants
· Delivering high positive cashflow in longer term
· Like to avoid taking risks
· Good at being firm with tenants – proactive in managing tenants
· Proactive with managing maintenance issues and putting systems and processes on place to execute a maintenance schedule and plan
We hope this analysis has stimulated your thinking to consider which traits you have and thence which part of the property investment business you're most likely to succeed in.