When Feelings Meet Analytical Hard Liners
When we buy a property, of course, we run the numbers but/and we also have a feeling about the property. This blog posting is to get you to think about how your feelings should not always be ignored when buying a property.
I don't want to get into a dog fight with the folks who say that feelings don't matter and only the numbers do--because, yep...when a person takes that stance they are right and I would be wrong. Numbers quantify aspects of feelings...If I tell you I have a high FICO score what do you feel about me? Now compare that feeling to what you might feel if I told you I had a low FICO score.
I am writing about the gray area into between the facts we call numbers and the emotional responses we have about a property. Therein lies, at least from my perspective, the art and science of real estate investing. Sometimes we have numbers that can go either way in a deal, and often we are left with interpreting our feelings.
We know a lot about the brain--for one thing the same pathways that analytic reason occurs at some point the chemicals that represent our feelings glide along these pathways as well. In many ways, our feelings often dictate which direction we will go when we come to a hard decision, or when weighing several competing factors. The fact is that intuition plays a role in our decision making process so why should I fundamentally disregard it completely.
As a feeling based person, my feelings tend to serve me well in navigating the world. Of course, I have been burned in love and in war but my feelings have also saved me in love and in the wars too.
I am not saying you should throw the baby out with the bath water and become a solely emotional feeling based investor. I am also not advocating that you downgrade your own lived sense in life, or how your feelings have helped you in the past either.
Feelings help us in our decision making processes. Not knowing our feelings is where the danger lies. We need both sides of our feeling and analytical brain in order to maximize it's function.
What do you think? More importantly, are you in touch with your feelings?
Comments (2)
I like, no love (in touch with my feelings) this post. It highlights some possible blind spots for investors... I have seen many posts where people say "how do like these numbers"... and that type of numeric analysis is a great start, very prudent, and I would never skip it... but I also will see some of these gray area feelings come out in the post, like " but it is in a sketchy area" or "lacks parking or some feature" or is "just inconvenient," or some other negative feature... like in the backwoods of another state....
I like to comment on the numbers in these posts (usually something like "they look good, but maybe consider accounting for reserves and your own management").. and then something like, "remember you may have to go there at night in winter alone"... or "the numbers don't help if you are miserable and don't like the place" (and the tenants or applicants will sense that)... or "do you really want to fight the parking every time you drive up" or "commute a couple of hours just to do a minor task?" That all feels bad even if the financial numbers look good...
If your feeling is dread every time you drive up (or even nearby), you probably will not keep your rental long term or have the right oversight--at least not as good of management as you would if you have a positive association. The numbers should look right and the deal has gotta feel good too... That said, I do think people are able to improve a property (rehab, etc) and select better tenants (using objective factors, of course), to make the situation feel right, too...
Michael Boyer, over 9 years ago
Hi Michael,
Sorry that it has taken me so long to respond...I didn't know that you have responded. I agree that sometimes we can make things right through our actions. I think finding a balance between numbers and gut instincts is optimal, but that does not mean, and I don't think that you were suggesting this at all, is to ignore the numbers. Placing ourselves in the feelings of others can help us as we try to think through how to market our property, buy them or sell them. Thanks again for responding, and all the best, Brian
Brian Ragsdale, over 8 years ago