…and how to turn them into green lights
Success in property investing is a journey that starts with a single step, with financial security and long-term wealth generation your destination. However, before you can follow in the footsteps of successful real estate moguls before you, or blaze your own trail, you need to be aware of the many potential pitfalls that could send you down the wrong track.
There are several factors that can have a bearing on whether or not you should get started in property investing, and it’s important to give careful consideration to your situation before taking off.
We’re taking a look at stop signs that may prevent you from proceeding with a successful investment, as well as the steps you can take to turn those red flags into green lights
1. You haven’t made a map
It’s a common story all over Australia; budding property investors racing headlong into buying an investment property without proper direction. It’s hard to succeed in real estate if you don’t know where you’re going, or how you can get there, and you’re at risk of buying the wrong property or borrowing more than you can afford. This can lead down the path to significant stress and financial difficulties.
Just as you would follow a map to get to a new destination, you should sit down and work out a detailed investment plan before buying your first property. Questions you need to ask yourself include what financial goals you want to achieve, when you want to achieve them and how you will make them a reality.
It’s a little more involved than typing an address in Google Maps and requesting directions, so consider speaking to a trusted financial planner, mortgage broker or property investing expert to help put your strategy together.
2. You bypassed your research
Location, location, location is the real estate industry’s favourite catch-cry, but selecting the right investment property is much more complicated than just choosing a “hot” suburb. You need to be aware of what the property market is doing to get an idea of where to go.
You’ll want to get an idea of the types of properties that will help you achieve your goals, the areas where they are in demand, and the types of tenant they are likely to attract. Their potential for capital growth and rental return are impacted by the public services and amenities nearby, as well as the local Council’s vision and policies for future development.
From suburb profile reports to government zoning and infrastructure plans, there’s an array of useful information available. Chatting with a trusted buyer’s agent can also help you access a wealth of useful knowledge.
3. Your goals are unrealistic
Success in real estate is a marathon, not a sprint. You need to be realistic about the growth potential of the property you choose, and how long you expect that growth to take. 99% of the time, property investment provides a medium- or long-term investment option rather than a chance to turn a quick profit.
If you have spent quality time on your strategy map, done thorough research and given careful consideration to the potential potholes in the road, it will be easier to keep a realistic outlook and you’ll have a much better chance of success.
4. You ignore the need for ongoing upkeep
Owning an investment property is not as cut and dried as making a purchase and waiting for capital growth. Unlike other assets that don’t require ongoing attention, an investment property needs regular tune-ups. You’ll need to find tenants, follow up rent, and take care of repairs and maintenance.
It is possible to attend to this yourself, but you may have better results by hiring a property manager. The right property manager can help you meet the responsibilities of being a landlord, navigate potential tenant issues, and assist you in getting adequate insurance cover in place.
5. You’re afraid to ask for directions
No matter what type of investing you’re planning on getting involved with, one of the biggest mistakes you can make is assuming that you know everything and venturing forth unprepared. There are plenty of roadblocks to overcome, so the more knowledge you have at your disposal the better your chances of success.
Hopefully, you’re now aware of your blind spots, so you know where it would be best to ask an expert for directions. Do you need help choosing the right investment loan? Ask a mortgage broker for assistance. Are you having trouble finding the right investment property? An experienced buyer’s agent can help. Are the taxation and other financial implications of investing making your head spin? Your accountant or financial adviser can offer the support you need.
If you’re willing to ask for advice from people who know more than you, their knowledge can point you towards an investment property portfolio that delivers you to the results you want.
If you want more tips about turning potential property investment mistakes around, why not read our 19 Disastrous Mistakes Made by Property Investors eBook.
If you’re not sure what type of strategy would best for you or you would like to learn more about different strategies, why not download our 4 Strategies to Success fact sheet.
Or, if you’re ready to talk about buying your first home, why not complete our Getting Started form to get the ball rolling.
If you’re ready to invest and you’ve got any questions about finance, call us for a free Financial Health Check: 08·9381·7450 or download our Finance Services information.