dothesums blog

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I am astonished by the number of posts and comments in forums, stating that a house should be considered, only as a home.
This simplistic view defies reality.
The price of residential property, is subject to supply and demand at the time of sale. It is a market.

What undoubtedly can be said, is that the decision making process of buying and selling is often ineffective and inefficient. Decisions are poorly made and based upon little, or inadequate data. The overall process is carried out at an amateur level and is no better than buying a lottery ticket. Little research is carried out, averages and generalities are used and modern analytical tools are absent.

For most people a house is the largest purchase they will ever make and together with their pension, is the biggest investment asset they will acquire. These decisions need to be taken with some care and much thought, using facts and evidence.
It is time for most of us to become more 'business-like' in buying and managing our major assets.

Time to raise the level of managing the purchase of a house to a professional level.

How can this be done?

The key is to change the perception of the owner/buyer, to one where they are buying for a tenant, i.e.themselves. The buyer is therefore, both landlord and tenant.
Immediately, they have now removed seeing a house as a commodity, yet retain recognition that it is an investment. Instead of starting with the property, they will begin with the customer needs and requirements, after all they know what they like.

Speculators start with the house, investors start with the customer.

Now this becomes more like a business process, where the business manager starts with the maxim that 'no customer means no business'.
It then follows that techniques such as; Cash Forecasting, Return on Investment and Forecast Values be employed, so that ownership is maintained, negative equity avoided and value maximised.

Potential purchases are appraised on the accommodation provided and the investment being made.