Why You Should Take the Sleep Test Before Investing in Property

Why You Should Take the Sleep Test Before Investing in Property

Written by Caitlin Wood
Last Updated September 20, 2019

Spur of the moment decisions come often in most of our lives, unfortunately, what usually follows making such a decision is regret. While there are several ways to combat impulsive spending, it’s especially crucial that you take time to think about your decision when making larger investments such as real estate and property. If you’re facing a big land or building purchase and haven’t taken the time to think about such a thing, you may regret making that decision shortly after signing the paperwork. In order to find out if your first impulse is the right one, you need to take the sleep test before investing in property.

The property sleep test is essentially one way of “sleeping on it”. Most property deals take a long time to actually go through. If you’re interested in a piece of property and want to sign right then and there, take a step back, go home and get some rest. If you still feel the same way about purchasing that piece of property as you did the day before, then your decision to buy has passed the property sleep test.

If you’re a large investor in property and real estate, you know doubt know what it’s like to have made a purchase that didn’t pan out. Millions of dollars are lost every year in spur of the moment decisions that have resulted in a bad investment. Taking the sleep test before investing in property before you buy can shield you from these bad investments. Your mind is excited and your adrenaline can even rush when you get excited over purchasing a piece of property. By letting your mind slow down and think a bit, you’re actually putting yourself in a better stance to make the right decision. You’ll often find yourself changing your mind in the morning. If this occurs, then the purchase did not pass the property sleep test, and you should let the investment go. Even if whoever purchased the property succeeded, you may have very well ended up reselling the property at a loss.

The property sleep test lets your mind and body get out its excited state that it may have been in before you purchase. In the unlikely event that the property needs to be purchased on that day, simply let it go. When you can’t think properly, you make poor decisions. The property sleep test is the solution for avoiding such mistakes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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