Buying property can be a game of high stakes. For many, it’s the biggest single investment they’ll ever make, and it’s important to get it right. Are there specific skills and strategies to buying a house? There are, but it’s something that few of us do with enough frequency that they’ll ever become routine. We can, however, draw on experience from other facets of life to help navigate the process.
At first glance, it doesn’t seem like property and poker make a likely pair. In poker, there’s nothing we can do to ensure we get the best deal. In property, the hand we play with isn’t solely dependent on the luck of a draw. However, there are some techniques that apply to both that can help overturn the old adage that ‘the house always wins’.
Keep your cards close to your chest
When we’re playing poker, every movement is scrutinized by our opponents. Physical gestures and tics that can give away how we feel about our hand will be exploited by other players if they think they can get a read. One technique professional players often use is wearing sunglasses at the table – if going to a showing is a little less intense then showing up on the Vegas strip, we still don’t want to give away important information. Don’t let on that you’ve been pre-approved for a certain loan amount as that number will quickly translate to the seller’s agent as ‘buyer can afford that amount, take no less’. Don’t give away signs that you’re ‘mentally moving in’ by vocally espousing where your favorite collectibles may go. Be aware of what you’re saying and doing even if not in the presence of the seller as many homes are now fitted with recording devices like video doorbells and camera baby monitors. Like poker, a little subtle bluffing can go a long way.
Keep an eye on your stack
There are fixed costs to poker, like there are to purchasing property. To get the action started, at least two players must put in chips before any cards are dealt, known as ‘blinds’. Working out the cost of doing business is key, as it allows us to calculate whether we’re playing at the high-rollers table or if our ambitions should be a little more modest. Likewise, houses have associated costs – home surveys, pest inspections, loan fees, legal fees and others. Work out exactly what you’re playing with.
Play the long game
While every dog has his day and anyone can hit a lucky hand, poker is far from a game of chance. Top level poker is based around long-haul tournaments and players like Phil Ivey, Phil Hellmuth and Daniel Negreanu have dominated the pro circuit for decades because they’re adept at navigating the landscape. If we were invited to a game at someone else’s house, we’d ask the inviter or host about the other people we’d be meeting there, as we’d look to know how those table dynamics – analogous to a market – might work. Many poker websites now offer coaching as the online game has seen a glut of new players come on the scene over the pandemic period. In both scenarios, relationships and expertise are key.
Know when to fold ’em
Like Kenny Rogers sang, sometimes in poker, you just have to admit defeat and walk away from a hand. That’s referred to as folding in poker and there might be a time when you have to do the same in a property purchase. Hidden problems with the building or complicated legal issues could mean it’s more cost effective to walk away; knowing when to cut your losses is important. This can be particularly difficult as in property there’s no blind bets – we may have invested a significant sum to uncover those problems. In an unfortunate case of life imitating entertainment, the house from Tom Hanks’ 1986 The Money Pit remained a money pit, selling in 2019 for a near $5m loss to its owners.
In poker, the house makes money from the players. In real estate investing, the aim should be the players make money from the house. Don’t be in a rush to dive in as soon as you see a pair. There can be value in holding on for the aces.
Credits: Tia O’Connor