06 Dec Investing Without Emotion
One of Australia’s most experienced property investors says it’s surprisingly easy to let sentiment stand in the way of success. Here, he offers his advice on overcoming emotional barriers and achieving greater personal wealth. Nicola Middlemiss reports
Most people considering investing in property would claim they’re driven by solid reason, rather than emotion.
But according to Allister Lewison, co-founder of OpenCorp, sentiment can creep in and influence the most rational of would-be investors – and even those who have invested before.
“It’s really hard to prevent emotion from clouding your judgment,” he says.
“The reason people let emotion get involved is because their initial motivation for doing something can have an emotional factor behind it, so when they’re making decisions it can get quite easy to jump in and make it for emotional reasons.”
Whether it’s a desire to provide a better future for their family or to semi-retire at an early age, Lewison says the majority of property investors aren’t driven by the need for a bigger bank balance, but rather by the personal opportunities investing allows.
Lewison – who has helped everyday Australians amass over $200m in property – says one of the most common emotional mistakes he sees is investors taking advice from unreliable sources.
“They go to the family barbecue and their uncle who has never invested in his life is giving them advice. You’ve got to be really careful about where you’re taking your guidance from, because that can absolutely lead you down the wrong path,” he says.
Another major emotional barrier arises when investors have an attachment to their local area.
“People think. ‘I know the local area, I like where I live; I’ll be able to drive past and make sure the lawn’s being mowed’. That’s being emotional about your decision,” says Lewison.
“It’s about people wanting to look at it and touch it, but these aren’t the right reasons for buying a property. The chances of the best investment for you being three doors down from your own house are like finding a needle in a haystack.”
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Educating everyday Australians about the right way to invest is one of the main reasons Lewison, together with his brother Matthew and friend Cam McLellan, established OpenCorp. With a wealth of experience and an expert knowledge of Australia’s property market, they saw a gap in the market when it came to providing valuable guidance to investors, while minimising their potential risks.
“We’re a team of property experts. We’ve been doing it a long time now, and the key thing for us is making sure that people are going into all of their decisions with their eyes wide open, understanding the risks and understanding the strategies to overcome those risks,” he says.
With a personal fortune sitting somewhere around the $45m mark, Lewison has enjoyed significant success and has come a long way from his first investment property on the outskirts of Melbourne – but he’s the first one to admit the industry is riddled with risks.
“There are so many risks involved; it really is like a minefield out there. But we’ve done it for a long time and our track record and client testimonials speak for themselves,” he says.
The company is so confident in its ability to find low-risk, high-return real estate that it offers a rent guarantee to investors.
“The types of properties we’re in are in demand from tenants, so we back our service by saying that if you can’t find a tenant who’s paying you rent within a certain time frame, we’ll step in and cover the cost to give you peace of mind,” Lewison says.
“Typically, we don’t need to step in and do that, but it puts our money where our mouth is that we’re choosing the right properties for people and it’s providing a safety net for investors.”
The unwavering certainty comes as a result of the firm’s tried-and-tested MAP (market, area, property) approach, which leverages the expertise of 80 property experts to identify ideal opportunities for investors.
“We work from a MAP principle, so we look at which markets are right, which area is best inside those markets and then which properties are right inside those areas,” Lewison explains.
“About 180 hours of research goes into finding the right property per person, and we’ve got a research team scouring Australia”
“About 180 hours of research goes into finding the right property per person, and we’ve got a research team scouring Australia for the right properties.”
It’s a methodology that Lewison says would be near enough impossible to execute without a dedicated team of industry professionals on hand.
“If you just walk past the local real estate agent, there’s very limited chance of finding the right property,” he says.
“Even if you understand the right market to be in and the right area to be in, you might end up choosing the wrong property, and instantly nothing else matters because you’ve thrown all of the hard work out.”