It doesn’t matter if you are a beginner investor with one property on your books, or if you are a seasoned professional with a whole portfolio of properties, you can still make mistakes. Experts have noticed there are 10 common mistakes that every property investor is capable of making. Are you making any of these common errors?
1: Thinking Investing Is The End Of Financial Worry
Owning property does not automatically guarantee wealth. The money will not simply flow in as you sip cocktails on the beach. There is money to be made in property, but only if you put the hard work in first.
2: Not Crunching The Numbers
Before sinking hundreds of thousands of dollars into a property, it is important to check the viability of the investment and the effect it will have on your cashflow.
Ongoing maintenance and day to day costs can make the difference between a sound investment and an absolute lemon. So make sure you crunch the numbers first.
3: Not Knowing The Risks
Property prices will not always go up, in fact sometimes they will drop below the initial amount you paid. Understand the area, if the price is realistic and know the projection for the town’s future. You can then assess how worthy the investment is.
4: Ignoring The Experts
Learn from the wisdom of others so that you don’t make the same mistakes they have. Have an accountant and lawyer with knowledge in property investments and utilise the experience of local investment associations.
5: Not Structuring A Loan Correctly
Finance is more than simply asking the bank for money. You need to consider how you will pay back the loan in the most efficient way. Speak with a mortgage broker to discuss the options of revolving credit, as well as fixed and floating portions.
6: Not Managing The Property Right
Consider hiring a property manager to ensure you are charging the appropriate amount of rent and are able to deal with problem tenants. They will also help you stay on top of maintenance and repairs.
7: Not Doing Their Homework
Check that the property is a sound investment. Assess whether it has structural flaws, leaks, damages, or lease stipulations that prevent you from doing what you want with it. Otherwise you might find yourself sinking money into a bad egg.
8: Buying On The Rise
A lot of investors choose to buy when the market is on a high. This is a terrible time to invest. It is more sensible to invest when prices are lower and you stand to gain.
9: Not Seeing It As An Investment
Remember you are buying this as an investment not as a place to live. That means that you don’t need to spend a fortune to furnish and renovate to your own taste. In fact it is more sensible to have a neutral and functional approach for wider tenant appeal. Your decision to purchase should be based on the numbers, not how pretty the garden is.
10: Buying In The Wrong Location
Be careful when you buy in a town that is booming because of a certain factor like industry. If something affects that, then the property value could rapidly drop. While it is cheaper to buy a home in an area where the prices aren’t as high, you might struggle to tenant the house because no one wants to live there. In the end your cheap deal could end up being a bad investment with no return.