‘Try Before You Buy’, If At All Possible (Investment Version)Guest Post
This post was originally published here.
The worst investment I have ever made in Thailand was buying land. I had the idea of building a house for my parents on a block in Cha-am, Phetchaburi province, at the southern end of the Kingdom’s central region.
Don’t buy a home unless you really want to live there
After I acquired the land, my parents lived in the area for a few months on my suggestion because I thought it would be best for them that they get a feel for the area before building the house; it ended up being a good decision because they didn’t like the area at all.
Basic questions to ask yourself before a cent is spent
In an ideal world, I would have let my parents experience the area before buying the land in the first place, but it was a good lesson. Nowadays, before making an important decision I ask myself two simple questions: “Is there any way to test it first before committing?” and “What would I recommend my best friend to do, if he was making the investment?” Other great questions I like to ask are: What don’t I know? What don’t I see? And what assumptions am I making that may or might not be true?
What don’t I know? What don’t I see?
To emphasize the importance of these questions, a friend of mine started a business that sells nitro coffee from small mobile vans around Bangkok. He made the assumption that he would have few competitors due to the time and expense of getting started. Almost immediately after setting up his company, Starbucks started selling nitro coffee!
Andrew’s takeaways – Avoid these mistakes to become a better investor
Try before you buy
Land is usually a very illiquid investment because when you want to sell it, it can be very hard to find a buyer, especially at the price you want. Therefore, it makes sense to do a considerable amount of research, but that research should be done before you buy the land, not after.
Mistakes in this story
1. Failed to initially research
- Inadequately researched type of investment
- Failed to test the investment thesis
Learn about the six ways you will lose your money and how to avoid them here.
Article by Become A Better Investor