S2E6 - The Cost Of Waiting: When Playing It Safe Quietly Becomes Risky

Imti: [00:00:00] All right, cool. Today we're talking about a tension a lot of people feel, but they don't always say out loud. Waiting can feel like the safe option, but sometimes it quietly creates its own risks, not because people are lazy or not serious, usually it's actually the opposite. They're trying to be careful and protect what they've built and not make an expensive mistake, especially when it comes to purchasing their first investment property. So we wanted to unpack that properly. Why waiting feels safe, when it helps and how to work out whether it's actually protecting you or keeping you stuck.

So let's start there. Why waiting feels safe in the first place? Skye, from your perspective, what are people actually trying to protect when they delay making a move?

Skye: Mm. I think it's either the unknown or money generally. That's a very broad answer. In my space the delays can be something from selecting the right tenant down to making a decision on a repair. So those sorts of things I see. If the decision's not made and they're [00:01:00] waiting, it can potentially cost them more money.

Imti: Mm-hmm. And when you're dealing with people on the other side of the fence, for example, when you're selling a property, what stops vendors from listing when they probably should? But also what stops people who should be putting offers on a property from making that decision as well?

Skye: I think it comes back to the unknowns. Some vendors will delay selling when they probably should. Because no one's got a crystal ball. And they're not taking the information that they do have to make the decision at that point. With buyers I think Pete's probably better placed to answer this. But I see the fear of overpaying is a really big one, as to why people would delay making a decision. 'cause we've talked about that before. That. That's a whole other episode, but again, it comes back to the information that you have to be able to make that decision.

Imti: Mm-hmm. And it sounds like the common pattern there is doing the wrong thing, being afraid of making a mistake, whatever that mistake would be. Pete, how do you see the fear of doing the [00:02:00] wrong thing show up in your conversations with clients?

Pete: I think it's when it's the repeated questions. We'll map everything out and we'll make sure it all makes sense, but it's when they go away and have a think about it and they come back with the same question, but in a different way.

Speaker 5: Mm-hmm.

Pete: Like they're trying to convince themselves out of buying, in a way.

Speaker 5: Mm-hmm.

Pete: And it's just reiterating the same thing over and over again. And that's when I pull up a few clients actually and say, look, you may not be ready for this. Because it is what it is. And if they can't comprehend it and it's laid out simply and you've tried explaining in a number of ways, that's when I find, yeah.

Imti: Sure. So what's an example of that? You said, asking the same question multiple ways. For someone listening, they might actually be internally asking themselves these questions.

So what does that look like in conversation?

Pete: Oh, it could be something like whether or not this location is going to be the one that makes sense and it's gonna perform the best. And we're looking at the suburb data and it says what it says all the indicators are pointing towards the right direction. They'll go away. They'll Google something, they'll find something on Reddit which might contradict that piece of [00:03:00] information. And it hasn't come from a very good source. And that will start the whole cycle of actually

Skye: the confusion.

Pete: The confusion, and to start rethinking whether or not it is in fact the right suburb for them. But even from a cashflow point of view, the numbers could be the numbers and they'll just come back and say what if council rates are three grand, four grand? Even though we've got all the buffers in there. They'll go line by line. They basically start to question everything, to be honest.

Imti: Mm-hmm. And bringing it back to why it feels safe, why do you think that they go to that extent of questioning it that much and modeling it that far? What does that give them in terms of the feeling of safety?

Skye: Well, they're not stepping into fear, right?

Pete: Yeah. They're just avoiding it.

Skye: Yeah.

Pete: I think they're just trying to find ways to avoid the decision and to justify the avoidance.

Imti: Mm-hmm.

Pete: And they think they're actually doing something that is moving the needle for them, but it's not really.

Skye: No.

Imti: Yeah. Where I see that come across a lot of the time is when we're running borrowing capacity figures and purchase price scenarios with clients. Because at that point in time, they're letting go of a whole bunch of money that they've worked really, really [00:04:00] hard for. And so it feels really intimidating. And then the other side of that is, well, if we wait, we can hold onto this cash and we feel safer about it because we've got this bigger safety net around us. But the other side of that fence, and I know we've said this a lot of times, is that you're never gonna be 10 outta 10 ready for a property decision. You're probably gonna get to an eight out of 10 at your absolute ceiling, and that should probably be the benchmark around whether you do make a decision or don't make a decision. If you're always looking for the nine outta 10, or the 10 outta 10, for example, market conditions to be perfect, or for you to have more savings in the bank or a pay rise that would make a massive difference. Okay, but when that happens, what's the next goalpost that you're gonna put up?

Because your new 10 out 10 to

to avoid making the decision.

Pete: Mm-hmm.

Imti: Becomes an eight out of 10 again.

Pete: Yeah.

Skye: Mm-hmm.

Imti: And the common theme there is that, to bring it to your point, Skye, is that it's the fear of the unknown and why waiting feels safe is because. It's familiar and [00:05:00] that's something that really needs to be challenged in terms of whether it's helping you or whether it's not helping you.

So we just touched on safety really being deep seated in avoiding the unknown, but this next bit really matters as well, and not in a scare campaign clickbaity sort of way, but based on real conversations that we're having with our clients every single day that doing nothing also has a cost to it as well.

So it might feel comfortable, but there's cost ticking away in the background in terms of not taking action when you are ready, Skye, from a property manager's perspective, what opportunities, conditions or chances do people let go by staying on the fence and not taking action?

Skye: Hmm. It sounds obvious, but delaying the decision on choosing your tenant can cost you that tenant and that looks like potentially more vacancy days, because you're then back to the drawing board and you might not get as good a tenant.

And I see it time and time again, and I try and [00:06:00] warn landlords about this through the leasing process. When I come to you, you need to decide then and there. You don't have overnight to think about it. You really don't even have time to go to your partner to discuss. You need to set your guidelines before we get to that point, because you just don't have that many to choose from.

Imti: Mm-hmm. And I'm sure that's something that you would see happen really often with first time investors, right?

Skye: Yeah.

Imti: Where it's literally their first rodeo of having a tenant or trying to find someone new and they almost go into an analysis paralysis thing. Yeah.

Where they, yeah. try to look at 10 CVs and not make a decision.

Skye: Yes. So if I've had the opportunity to pre-warn them, they're usually prepared and know that they need to decide, but sometimes I don't get that time to be able to explain that. So we might get 10 applications, only one of them's good. And so because they haven't got five good tenants to choose from, they're like, is it the right decision? I don't know. More information in this case doesn't actually help you. Let's say you had three good applicants to choose from, you're still gonna need to make a decision and the good tenants won't [00:07:00] wait. And that can be very costly for investors and I don't think they realise that wait time can result in 2 to 4% of their annual revenue.

Imti: Yeah,

and I think that's something that we do need to unpack in another episode is that decision making process around tenant selection and the risks that do come with that. 'cause I definitely think for first time property investors is something that gets underestimated all the time.

Skye: Mm-hmm.

Imti: But let's avoid going on a side tangent, but we'll definitely tackle it moving forward.

I wanna step that back. So, Skye, you just walked us through indecision in the property management space. Pete, I wanna talk to you about the mental side of it, because you are helping clients navigate multiple decisions as a buyer's agent, right? It's strategy, it's areas, it's purchase price, it's who builds out on the team as there's a lot of decisions that you help people go through. In your experience, do decisions tend to get lighter or heavier, the longer someone delays?

Pete: I think it's like any decision, it doesn't matter if it's [00:08:00] about property, it just gets heavier.

Imti: Mm-hmm.

Pete: Because you find yourself getting absorbed by it. You're probably thinking about it when you go to bed. You're probably thinking about it at work, thinking about it on the weekend in your spare time. It definitely gets heavier and we're not even talking about the fact that the market just continues to go, prices continue to rise,

Imti: mm-hmm.

Pete: Just the fact that it takes up so much of your mental capacity.

'cause it's a huge decision.

Imti: Yeah.

Pete: People are spending, like you said before, all their savings, into their first property investment. They wanna get it right, so it's gonna consume them and it a hundred percent gets heavier.

Imti: Yeah. And making that first decision, because they've never done it before, it carries even more weight.

Pete: Yeah.

Imti: So it feels better to just sit on it for a little bit longer. Then it hits a point where it crosses over and it actually starts feeling like a burden.

Pete: Yeah. And that's when all the questions come, like I talked about before. I think when it hits that point in the crossroads where it becomes a burden, that's when the questions keep creeping up.

That's when you start consuming the wrong content or the wrong news and the wrong information online. And yeah, from there it just gets a lot [00:09:00] harder to actually execute on a decision.

Imti: Especially right now with the way algorithms and stuff like that work, right? I don't wanna put on a tinfoil hat, but if you are trying to pull something apart and you look at it through a negative lens, next thing you know, every single time you open up your phone, you're just getting fed the negativity.

Pete: Yep.

Imti: Over and over again, right?

Pete: Yep.

Imti: And so it makes that decision making process even harder because you're seeing everything

Skye: amplified,

Imti: reinforcing your point of view when really it's just robots.

Skye: Just information.

Imti: Yeah, a hundred percent.

Pete: And one of the big decisions around this is their budget. Whether they can afford it or not, whether a rate rise impacts their borrowing capacity, and then they go back to square one. So Imti, from your point of view, how do you see borrowing capacity fall into all this?

Imti: Borrowing capacity is one part of it. I'd really like to talk about purchase power and sustainability of it all. Because borrowing's one part of the equation, but how much you can buy for and what your buffers are, that all completes the picture. The biggest thing, and I'll tie it to a client that you and I had recently, [00:10:00] Pete. They were on the fence about getting into the market for 18 months. They had the cash aside, they had the equity. It just wasn't the right time. They were waiting for their kids to finish primary school. Surprise, surprise, their kids ended up in high school after that. Then that became the next point of oh, maybe we'll wait until the kids are done in school. And through this whole process, it was all lifestyle stuff. It wasn't financial. They had the means, they could do it. In their minds. like, we're making the responsible decision 'cause we're not making this decision right now, we're waiting until the time's right. What that did to them over the 18 months was that day one, if they had made this decision, they would've been purchasing a property at $600,000. In the same area that they ended up buying in, they ended up paying what, 720, 730 and it was for the exact same suburb, same property. They had the capability on day one. And so when it comes down to the purchasing side of it, yes, borrowing power can be [00:11:00] impacted. Policies change rates go up, borrowing capacity goes down. But the real damage that gets done is the movement of the market completely changing their banding, 'cause their borrowing capacity and capability might not change at all, but what they can buy and in what areas, changes dramatically. And that story is a really good segue into the next thing that I wanted us to cover, which is waiting intentionally, verse waiting by default. ' cause we're not saying you always need to rush in, but when you're waiting, it should be with intention and not just by accident. So Skye, what's the difference between a healthy pause? So someone who's thought about everything and is making the right decision? potentially someone just trapped in analysis paralysis or just in a default floating mode.

Skye: It comes back to having the information, being prepared to take action. I could benefit from healthy pauses more in my life, but again, the decision to take an action usually comes from a place of having the [00:12:00] information. So, a healthy pause means you need to get more information.

Imti: Mm-hmm.

Skye: Otherwise why aren't you proceeding?

Imti: So if you've got the info and you're waiting, then that would be healthy. But if you don't have the info, then you're just going in a circle.

Skye: Yeah.

And hence where that analysis comes in and it is potentially going to cost you money because if you are then absorbing too much information, that's just another excuse to delay your decision.

Imti: Mm-hmm. Yeah, for sure.

Skye: Intention, I think is the word I'm looking for.

Imti: Pete, was there anything that you would add to that?

Pete: I think when you say having the information it needs to be the right information.

You can have all the information in the world and justify it in your head that you are taking a healthy pause. If it's the wrong information or if you're looking for the wrong information, it's not a healthy pause.

Imti: No, I completely agree.

The important thing during the healthy pause phase is to get the right information, filter it through so you can get the clarity that you need to execute on the decision

a hundred percent.

And people can get those two things confused. The right info really, really helps. Clarity actually comes from understanding what you wanna achieve, [00:13:00] but also what happens if everything goes wrong? Sounds like a very morbid exercise, but it's something we run through with clients all the time where, okay, if you're not working for a certain period of time, what happens?

And then they go, oh, well we've got savings in the bank. We'll be okay. Okay, cool. So we don't need to worry about that. What are you trying to achieve through an investment journey? Oh, we wanna retire early. Okay. How old are you guys now? 30. How old do you wanna be when you retire? 50. Cool. So you're gonna hold a property for 20 years and then once you tick over a lot of those goals, the clarity piece puts itself together and a lot of the relevant information drops away.

Um, it's almost like you need to start with the end in mind. What's the end goal? What can go wrong along the way and then work your way backwards with all the information that you've researched. I think if you get stuck in the pattern of just research, research, research, it becomes waiting by default, by default, because there's always gonna be more info and it's always gonna pull you in [00:14:00] different directions. For me, the clarity piece just comes down to where you want to go, over how long and what can go wrong along the way. And once you're clear around that, then if you need to wait, for example, you don't have enough cash in the bank if something goes wrong, then you are waiting with intention. But if you're clear on everything and you've got all your ducks in a row, then you're probably ready to go. For a lot of people, the mistake is thinking that they need to be fearless before they move, but usually they don't. They just need enough clarity and enough margin in their decision. Skye, what are the things people should pressure test before making a move?

Skye: Mm. I feel like you stole some of my answer for this because I was going to say coming back to your why.

Imti: Mm-hmm.

Skye: Whatever the decision is, why are you investing, why do you wanna choose that particular tenant? Even why are you buying this particular property?

Speaker 5: Mm-hmm.

Skye: I've mentioned this on the podcast before because I'll never get sick of telling this story.

My client who went to an auction and missed out on the property for I think $5,000, that's worth an [00:15:00] insane amount more now, she didn't focus on her why. So she was wanting to buy this place for her next 30 years of life. It was a big move. She didn't have the support to make the decisions or to remind her why she was there, and she's kicked herself over that decision every day since. Mm-hmm. And nothing has come close to matching that property. Had she had a bit more grounding in why she was doing what she was doing, she would've felt comfortable spending that extra $5,000 and she wouldn't be having all this time of regret. Mm-hmm. So coming back to the source of why you're making this decision in the first place.

Imti: Mm-hmm. that's a great point to transition to Pete around the how The why with your client was that they had a really long-term vision, but they didn't have the how to execute that decision. Pete, how do you help someone separate what real risk is that they need to think about?

For example, am I okay with overpaying $5,000 for this property that's going to auction? And an imagined worst case scenario, which [00:16:00] Skye's client went through.

Pete: Well, this is the thing. It all happens in the planning stage. It comes down to the numbers. And there is that fear of overpaying, but what I'm seeing more so now is the fear of not being able to hold the property.

Imti: Mm-hmm.

Pete: The fear of seeing interest rates go higher. And it's just about mapping that out in the plan at the start. I've had clients come to me and say, can I still afford this property? Rates just went up.

Imti: Mm-hmm.

Pete: We go back to the numbers. We've factored in extra 1% currently compared to what the interest rates are today. It's all kind of built in or it could be around what if there's a bit of a downturn in the market? Well go back to the plan.

Our time horizon for this purchase is seven to 10 years.

Imti: Mm-hmm.

Pete: So if it dips for a little bit, it doesn't matter. It's not gonna matter in the scheme of things. Because if you're bought in the right location, it probably won't dip. It will just flatline for a bit.

Speaker 5: Mm-hmm.

Pete: You're still gonna get in and get great value. It's just stepping through those worst case scenarios. But if you've done everything right upfront, you should have an answer for all of that as you're working it through if you're planning's on point.

Imti: The rate example is a great one, right? It's something that a lot of people are always thinking [00:17:00] about. If my repayments go up, what does that look like? Rarely ever does anyone think, oh, if rates go down, what do my repayments look like? But that's a realistic inverse of the situation. Rates do go down as well.

Skye: We've had that conversation.

Imti: Mm-hmm.

Skye: About what do you do when rates go down Imti?

Imti: Yes. You buy. When we talk about the worst case scenario I wanna dive into this for another layer. 'cause the rate example is really good. It's really common. It's something that a lot of people would be thinking. But for the person who's thinking about investing, but they're worried about their property being trashed or they're worried about what happens if a tree goes through it or there's a cyclone or natural disaster, that is a really, really bad worst case scenario.

How does that risk get managed?

Pete: It's a good one because a lot of the time it's never even asked.

Imti: Mm-hmm.

Pete: Especially if you're buying in good locations.

Imti: Yeah.

Pete: That stuff shouldn't really come up, but there is a risk that it does. So insurances is the answer there. Not being cheap on your insurances either, making sure that you are going with pretty good brands, not the cheapest.

Yeah. Making sure that the building value is actually what it will [00:18:00] cost to rebuild the property as it currently is. Don't cheap out on that.

Skye: Most people don't even know how to do that.

Pete: No, no. And I get questions too from clients around what should I be valuing it at? And there's a lot of online tools now that you can do, but I always say add a buffer.

Look at inflation now. The costs are gonna go up for builds overnight, effectively.

Imti: Yeah.

Pete: And with the fuel costs and all that kind of stuff going on right now, but whether that's happening now or there's something different in the future, there's always gonna be something going on.

So insurances is huge, but making sure you've got the right insurance and valued at the right amount as well.

Imti: Mm-hmm.

Pete: And landlord insurance too, which is what Skye could probably talk to more.

Skye: Yes. And the confusion around the fact that. Everyone thinks they have landlord's insurance because the policy is called landlord's insurance, but it's not actually landlord's insurance.

When we refer to that, we're talking about the insurance that covers you for anything in the tenancy.

Pete: One question I do get from clients, and it's something that I get surprised about, but it's happened a few times now is do they actually need landlord insurance?

Skye: Mm-hmm.

Pete: Because it's an extra maybe three, four, $500 a year. Yeah. [00:19:00] Mm-hmm.

Speaker 5: Yeah.

Pete: They see it as an extra cost, so they actually need it, but they don't realise that a tenant could be fantastic at the start. Something could change.

Skye: Circumstances change. Yeah. Circumstances. I say that every time. 'cause you get the response of, oh, we'll just get a good tenant. You can have a good tenant, but life happens. Literally had an amazing tenant pass away. And as unfortunate as that, is that left landlord with costs.

Imti: Mm-hmm.

Skye: Her landlord insurance policy didn't cover it 'cause she had the wrong policy.

Imti: Mm-hmm.

Pete: Yeah.

Imti: A lot of this conversation around how to decide without rushing is boiling down to risk. Risk and where you actually want to go. If you're clear with those two things, you can make a confident decision without rushing. In my world, risk is all about looking at buffers. Cash flow, making sure someone's loan structure aligns with what they need and plugging them into the right people. So the things like the insurance, like the adequate property management, like buying the property in the first place are all taken care of and de-risked. And that's the common theme that we [00:20:00] have when we're talking with first time investors is that property is risky. Shares are risky. Doing nothing's risky.

Speaker: Mm.

Imti: Waiting is risky. And so how do we just bring it back down to what do you wanna achieve? And then what's the risk management plan that you can put in place, and what's the level of acceptable risk to you? If you are clear on those two things, where you want to go and how you're gonna manage it, you can make that decision without feeling like you're being rushed.

Skye: Yeah. Mm.

Imti: All right, so let's land the plane. We've obviously gone through quite a lot of things in terms of decision making. What healthy waiting looks like and what unhealthy waiting looks like. If we were to give the listener a practical takeaway, someone who's listened to this whole episode and they've gone, you know what? I'm probably in this limbo in myself around waiting and not waiting. What's one action you would tell someone to take this week that would help them get clear on that Skye?

Skye: It's a bit jointed, but. One, make sure you aren't chatting to Uncle Tom at the [00:21:00] barbecue about your decisions. 'cause Uncle Tom's never bought a property and he doesn't know anything. But then the follow on from that is to stay off socials. And you touched on it before that if you find something negative on social media, it's literally designed to give you more of that.

Imti: Mm-hmm.

Skye: So you might think the world is ending purely because you've shaped the algorithm that way. Speak to your experts. That's who you need to be listening to. Avoid the click bait, avoid the doomsday scroll because you got yourself there by interacting with negative content.

Imti: Mm-hmm. A hundred percent. And on the note of the negative content and talking to the right people, if I was to tell someone to do something this week around helping them get clear on the next decisions, and this is gonna sound very boring and mortgage broker of me, but it would be writing a list of what's making them wait.

What are all the things that are making them wait,

Skye: like a pros and cons list,

Imti: sort of, it's an internal external list. Write out all the things that aren't making you feel safe about moving forward. And then next to it, just noting [00:22:00] down whether it's something you can control or something that's completely out of your control.

Speaker 5: Mm.

Imti: And what I find with a lot of our really smart professional clients who just talk themselves out of taking action sometimes is that they're worried about external stuff that they can't control. And all the internal stuff, like the savings, the cash, the insurance.

Speaker: Mm.

Imti: Finding the property by using a buyer's agent. They can control all that stuff. And once they realise that, they just go, oh shit. The decision's a no brainer.

Skye: Mm-hmm.

Imti: Do a brain dump in the notes section of your phone and just be like, what are all the things that are stopping me from moving forward? And understanding whether it's something that you can control or something that you can't control.

Pete: So, Pete, we've heard from Skye, we've heard from me. What's one action you would tell someone to take this week that would help them get clear on the idea of waiting

To work out whether or not you are deliberately making the decision to wait or not. Because some of my best clients, they'll actually make that deliberate decision to wait, because they've [00:23:00] mapped it out.

We've gone through the plan, we've gone through the strategy, and for them, they're comfortable waiting. They don't care if the market's gonna continue to rise, it just doesn't suit them. Really getting clear on that. If you're gonna make the decision to wait that it's deliberate and that it is actually consistent with your plan and your strategy and that you're not just waiting for the sake of it. 'cause at the end of the day, that is also a decision that you've gotta be comfortable with too.

Imti: Mm-hmm. That's a great way to bring us home. Waiting is okay. We're not sitting on this side of the microphone saying, everyone needs to go out and buy a property tomorrow and make decisions really quickly, and you should never wait. It's about waiting with intention and just getting very, very clear on why you're doing it or

Skye: why you're not doing it.

Imti: And that's what it all really boils down to, Pete. You've brought us home strong. And I'll wrap us up there. Uh, if you've been listening to this and you want to connect with us on socials or if you do want help on your property journey, our details are gonna be in the show notes. If it's your first time listening, welcome, we hope that you stick around and if you've been back for [00:24:00] more, thank you for coming back.