Buying Behaviour and Risk

risk

 

 

Never give up on a dream just because of the time it will take to accomplish it.
The time will pass anyway.
Earl Nightingale.
That brilliant and germane quote is a great way to start this weeks post.
A good definition of risk might be that it is the probability that a person will be harmed or experience an adverse effect from their actions.
Lets face it, we all face degrees of risk every day, which we hope to minimise by judging the situations we face.

Risk may also apply to situations with property or equipment loss.
But since this site is devoted to investment and consumer buying behaviour we  will work within those constraints rather than segueing into OHS areas where the term is often used.
Definition of Buying Behaviour.
Buying Behaviour is the decision processes and acts of people involved in buying and using products and or services.
At Ample Property Solutions we need to understand why consumers make the purchases that they make, what factors influence their purchases as well as social and changing factors in our society that will influence their actions.

A succinct number of Stages to the Consumer Buying Decision Process might involve the following.
1/Problem Recognition-Differences between a desired state and the actual condition.
A desire to obtain long term wealth, in a safe manner.
Something stimulated by the company through product information, like property investment, to reinforce the fact that the consumer is deficient in either knowledge or product/services.
2/Information search—Either an internal search through memory or an external search for information.
Usually denoted now days by using the internet.
3/Evaluation of different possibilities, looking to establish criteria for evaluation, features the buyer wants or does not want.
4/Purchase decision–Choosing from a vast product or service range.Quite often the case is, the more choices made available to a consumer, the slower the decision processes and from a marketing perspective, the lower the number of sales.
5/The purchase decision.Making the actual decision.
Obviously the higher the price of the goods or service..then the greater the “risk” involved.
6/Purchase-Can differ from the decision itself in timing between the decision and the actual implementation of the decision.
Post Purchase outcome-Is the consumer satisfied or otherwise.
Have they made the right decision.?
This also gets into areas of buyers regret which can be minimised with warranties,cooling off periods(especially for large outlays)after sales communication etc.
We have found that when a consumer is risk adverse, which they have a right to be for a large investment, this cognitive dissonance can be lowered initially, by the reminder that they will feel scared after they have signed the paperwork and proceeded with their investment property.
They are also told to ignore the advice of “friends” who undoubtably will be negative.
When we have queried clients on previous negative advise they have received from their associates towards property investment, we are nearly always told that the advice comes from people with little to no background in either property investment or risk analysis.

Here are some graphs which show simply why we love property as a wealth creation vehicle.

australia is growing We have a great economy.!

buildin approvals

Building approvals are racing ahead.!

So lets dip our toes into the types of risk with property investment.

Market risk, which is exposure too all asset classes in a similar way such as a market crash.

Liquidity risk-deals with the possibilities of an investor who desires to sell in a hurry, house flipping comes to mind.
Specific risk-the possible acquiring of a less than optimal returns on an investment property.
Interest rate risk-In Australian investment property, the interest rate risk instead lies in variable rate mortgages as the cost of debt capital can materially increase when the Reserve Bank ratchets up the cash rate.
The risk can be mitigated through the use of fixed-rate mortgages
At Ample Property Solutions we understand the mind set of a buyer and also understand the risks of investment.That is why we use independent experts from a variety of fields to help our customers make unbiased investments in high growth areas.
All cities obviously have different patterns of booms and slow periods.

cities compared

 

We advise our clients to invest with their heads and not their hearts.
You do not have to worry about the finish and colour of the kitchen in your investment property.
Thats what buyers worry about if they are buying for emotional reasons.
We on the other hand, are buying houses purely for long term, profit driven motives.

And since we brought up the kitchen finish as an example, we have to mention that all our homes are  of course created by master builders. 🙂

Life itself is a risk.
But so is your future.
Book a no obligation session with us in your own home and see how we can help you make sure you have a wealthy future for your family.

 

                                                 BOOK HERE
Once you see the tax benefits the Australian government provides, you will see the magic of how we can help you pay off your mortgage quickly and build a safe asset base for your future.

As Warren Buffet once said “A rising tide lifts all boats”..Its only when the tide goes out you can see who is swimming naked”, and “Price is what you pay. Value is what you get”.