Key Takeaways
- Three pitfall themes: overpaying emotionally, underestimating costs, and skipping due diligence.
- Cognitive biases require structural controls, not just awareness — build systems that enforce discipline.
- Six months of reserves, pessimistic stress tests, due diligence checklists, and proper insurance are non-negotiable.
- Risk management is what separates professional investors from speculators.
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Test Your Knowledge
1.Which cognitive bias causes investors to fixate on the listing price as a reference point for valuation?
2.What is the recommended minimum cash reserve per investment property for a new investor?
3.A broker pro forma shows operating expenses at 35% of gross income for a 10-unit apartment. This figure is most likely: