At every opportunity, we believe that it is our role to understand what motivates and attracts investors to Property Moose and Property Crowdfunding in general. It’s you, our member, who drives forward our partnership, the opportunities we list and the services we build. Our focus is on understanding and implementing new ways to better serve you and assist you in making your next investment.
This role gives us an interesting insight in to the mind of the investor. Along the journey we’ve noticed some key trends, particularly amongst those with the most valuable portfolios. Here are some of the habits of successful investors that we have noticed:
- Compounding
It’s interesting to see that those with the highest portfolio values are prolific compounders: they reinvest their yield in to new opportunities. In some cases this is such a well practiced habit that the growth of the portfolio continues to speed up considerably. This is a common strategy for investors across all investment types (not just property) and at all investment levels as it aims to minimise the amount of additional cash being injected in order to build wealth.
- Regular investment
According to Aristotle “we are what we repeatedly do. Success therefore is not an act but a habit”. A glaringly obvious trait of those with the largest portfolio values is that they regularly invest. Whether through compounding or regular cash investments, the intervals at which they invest is the key. Many investors feel it prudent to invest bi-monthly, tying in with rental payments and their own cash earnings.
- Have a goal
Do you know what you’re trying to achieve? Successful investors do. What’s the point of it all? We’ve found that many successful investors feel they are more focused and decisions are clearer and easier to make once they understand their own end game. Are you investing for yield or capital growth? Well that depends on why you’re investing in the first place!
- Live and die by your rules
Many experienced investors have rules; preferences that have been tried and tested over years of implementation. The most experienced have them honed to the point at which, based on yield, term and growth figures. they will know exactly how much to invest. This works great in a closed system and it will be interesting to see the impact of the (planned) secondary market that launches later this year on those that make their investment decisions with a bias on term.
- View your properties in the context of your wider portfolios
Property is just one part of an investment portfolio. By diversifying across platforms you allow yourself the benefit of multiple moving markets, potentially mitigating the impact market changes might have. Many successful investors ask the question, “what is my portfolio missing?”. Is it missing a short term, high yield, low capital growth investment or perhaps an opportunity that is long term with medium yield and high capital growth?
- Understand the investment landscape
FTSE isn’t just for 14th Feb, properties aren’t just to live in and futures aren’t just your holidays. As discussed, investors have goals but in order to take the regular actions that contribute to the investment habits and behaviours that will achieve them, successful investors seek to understand the whole market. Major gains in stocks and shares over 2 years might be great but what if property could offer a potential upside of 20% in the same time frame. Bearing in mind risk, where would you put your money? The same is also true in reverse and across multiple investment opportunities. Successful investors know what is going on in the investment world and are up-to-date with market changes on the whole. Sure, many are linked, but with the suggestions of new ISAs that aren’t index-linked, there is clearly a shift in investment banking thinking. Understanding the fisco-cultural movements within the investment world can be of huge benefit to successful investors.
- Diversify
Diversification and transparency are our mantra, in fact, the entire idea behind the Property Moose platform. Investors are encouraged to spread their money across different property types, locations, amounts and investment terms in order to maximise their exposure to market uptrends and minimise their risk from market downtrends. There is often a division amongst investors: the London investors and the non-London investors. Whether right or wrong, it’s up for debate, but, based on our interactions with investors, many of them feel the best place to invest in property is in London. Whilst that may have been the case with respect to capital growth, it can be difficult to predict the market forces that are at play within the London microcosm. Other investors feel that the London market is over-heated with a “bubble” situation forming and therefore seek to diversify their portfolios away from the South East and look for opportunities in other growth areas of the UK. For example, Hometrack predict a 7% growth in the city property market (1), and there are several interesting investment opportunities in the North of England where the Government has committed to boost the economy by £6billion between 2015 and 2020 (2). Where you choose investments geographically is based on your personal understanding of the market. We notice that successful investors are open-minded with a measured approach that considers all aspects in order to make balanced investment decisions.
The habits above are by no means exhaustive and of course are not rules that guarantee success. They are the culmination of interaction and observation of the habits portrayed by Property Moose investors. Every one is individual and it is important that you are only led by your own due diligence and understanding when making investment decisions.
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
References
1 - https://www.hometrack.com/uk/insight/uk-cities-house-price-index/november-2015-cities-index/
2 - https://www.gov.uk/government/news/long-term-economic-plan-for-the-north-east-announced-by-chancellor
