Delayed Gratification
Monday 3rd December 2007
Delayed Gratification
Victor Kumar could probably afford to drive a very expensive piece of road bling – you know the kind: European built, sporty, tinted, heavily chromed on the outside, leather swathed on the inner.
I say this because Victor is doing OK. He runs a successful mortgage broking business and owns a large investment portfolio.
But Victor offers a good example to all serious property investors.
He firmly believes in the principle of Delayed Gratification. In other words, he’s focussed on building wealth, not spending it.
Consequently, he drives a humble Hyundai. He says that if he were to pull up outside a property in a flash BMW the house price would immediately jump by $10,000. That’s not the case in the Hyundai.
“Everyone loves a battler,” he says.
No one likes a show off.
It’s that attitude which has helped Victor on the road to success.
Geoff Doidge and Paul Eslick (the Reno Kings) think exactly the same way. They are focussed investors with egos under control and no desire to be seen keeping pace with the Jones.
Hence their portfolios and wealth keep growing.
The concept of Delayed Gratification is worth keeping in mind as you set off to make a fortune in property.
I was reminded of it recently when some young clients approached me to find a loan for a rental property.
They had big investment dreams and earned enough money to make them come true.
Except, when I tested their ability to service a mortgage, I discovered their salaries were being consumed by huge car loans – and what cars! I admit to a twinge of jealousy.
However, there wasn’t enough money left to enable their first small step into the property market.
Their priorities were all wrong - set by a peacock’s desire to display.
We all fall victims to it: We all want to tell our friends and families how successful we are and nothing says it more loudly than a flash European car.
But frankly, it is self defeating. Road bling is the worst investment you can ever make. From the moment you drive out of the car yard, the car is losing money and will do so every day it’s in your possession. But worst of all it can seriously inhibit your future wealth.
My clients had leased their vehicles, so dumping them to claw back the cash required for property investment won’t be easy. It could be years before they can move.
A little Delayed Gratification could have overcome that.
I’m not suggesting we should deny ourselves life’s pleasures – quite the opposite – but when making a “lifestyle” purchase we need to honestly evaluate our reasons for buying it and whether it fits with our overall goals - if it doesn’t then move on.
By the way, Victor Kumar has joined the Finding Finance team in Sydney. If you want to talk with him about Delayed Gratification call us. I am sure he will oblige.
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