Many people come to me and ask: “Is this the right time to buy?” My question to them is, “Is this for investment or yourself to live in?” I find asking this question re-frames their mindset, because many of them will reply: “…Yes, I want to live in it…”

The reason why I ask the question is because most investors would not ask: “Is this the right time to buy?” Instead they would be looking at other factors such as Loan to Value Ratio, Cash Flow, and Return on Investments etc.

Mindset of a property investor

The mindset of a property investor is quite different to that of an owner occupier. An investor would look at their personal finances and whether or not the purchase is sound financially.

The traditional property investors understand the following:

* They are buying mortgages
* They understand it’s about cash-flow
* They are in it for the long term
* They are using property as a vehicle to leverage capital growth

Investors are usually looking for either capital return, cashflow return or both. An investor would not be worried if the property doesn’t look cosmetically nice or if the house has the type of flooring or type of kitchen plans that you like. Instead they would be looking to make sure they house is leasable, repairs if needed, financing cost, undervaluation etc.

Mindset of an owner-occupier purchaser

I’ve spoken to many people who are looking to buy their first ‘home’, a property they want to live in and also make fond memories. I’ve identified several things that I would like to share from our conversations (obviously these are generalisation and may not apply to each and every person).

An owner-occupier will:

* Look through many houses
o Looking for convenience to shops, schools and also their future
o Schools for their kids or future kids
o Close to friends or family
o Something that looks nice, smells good, feels good

* Once they find the ‘one’ they get emotional

o By this time they understand that every property is different and if they let this one go, they might not find another one like it and will regret it for the rest of their lives
o At this point, owner occupier buyers will pay any price for the property

* After they purchase their home, they only do one thing with their mortgage. Owner occupiers will generally repay their debt as fast as humanly possible.
* When property price goes up, they do nothing.
* When property price drops, they do nothing.

Before you go and buy that property, be certain you know whether you are an investor or an owner-occupier.