Investing in property is a national obsession for Australians. We’re a country that believes passionately in the dream of home ownership. According to the statistics, roughly two million Australians describe themselves as landlords.
Moreover, residential real estate represents half of all household wealth in our sunburnt land.
Looking Easy Isn’t the Same as Being Easy
Investing in property can be fun and profitable. It can also be frustrating, time-consuming and fraught.
Receiving conflicting advice along the way only adds to the confusion.
3 Common Mistakes First-Time Investors Make
However, having a clear understanding of how the property market works and the options available to you, will help you make smarter, more informed choices.
Here are the top three mistakes property investors make:
1. They Don’t Have A Strategy
Not having a plan before you buy an investment property is like trying to build a house without bothering to draft a plan, it can end up in a chaotic mess (which is usually bad!)
As with building a house, there are factors you need to include in your plan and contingencies you should allow for when buying property. You need to nail down your cost of living and clarify your preferred lifestyle together with the timeframe you’re looking for your investment property to generate an income.
So, avoid this mistake by setting realistic financial targets for your property and never lose sight of your end goal. Also, ensure you have an entry, hold and exit strategy in place – they can be lifesavers.
2. They Don’t Know How Property Investing Actually Works
If you read the commentary about property investing, it always talks about what you need to know and do in the real estate market. What is less frequently raised, is what you should try not to do.
Understanding how the real estate market works can help you avoid common mistakes. Getting this right, can mean the difference between success and buying a lemon.
Allow time to conduct due diligence on your target property. Failing to do your homework can put your financial stability and your capital growth seriously at risk.
3. They Listen To And Take Their Lead From Those Who Aren’t Property Investors
Plenty of people have opinions about how to invest in property, particularly those who’ve never invested in the property market!
Tapping into professional expertise is one of the first lessons of investing successfully. Knowing who to listen to is one of the key skills in being a successful property investor.
So, take professional advice and expert assistance where necessary. Professionals are there to minimise risk and reduce your stress when making property investment decisions.
Buying the right investment property in the right place for the right price can be an art form. It’s important to have your cash flow under control and to seek pre-approval for your loan from your financial institution.
Looming over your shoulder is a big chunk of change you can’t afford to lose flanked by a raft of complex legal processes. Do your homework, ask questions and never lose sight of your risk factors and you’ll be a happy and wealthy property investor.