You've done your research, and you're ready to work with a financial planner. But before…
There’s a lot of advice for people interested in property investment. But it’s just as important to know what not to do if you want to be successful.
92% of people who invest in real estate never make it past their first property and even fewer create real wealth by becoming a top investor. So, if you’re looking to get into the property game, here are a few things to avoid.1
Common Property Investment Mistakes
1) Failing to Planning Early
Many people start looking at property investment when they are already in substantial personal debt. Following recent property booms and the lifestyle stories of flipping houses for a profit, they look at making money on property as a way to “get rich quick” so they can retire debt-free and live the rest of their lives stress-free. It’s a nice dream, but it’s just not how it works.
If you want to be a successful investor, you need to do a lot of upfront work. First, you need to educate yourself. Learn what it takes to be a successful investor. Find some successful investors in your area and talk to them to find out what they did right and what they did wrong.
2) Not Doing Your Research
Another common mistake is not doing enough research. People often fall in love with a property and decide they want to buy it without knowing a lot of information about the area. Get information on the local economy, access to schools and public transport, the vacancy history and other relevant information.
This is a large and important investment. You need to be confident that the investment will be a good one. If you are not properly prepared, you could end up losing a lot of money.
3) Improper Cash Flow Management
Many new investors are so focused on the potential to make money that they neglect to ensure their properties are profitable. One of the biggest financial blunders a new investor can make is to buy a property that is not cash positive.
It’s important to know how much money you will need to get started. If you don’t know what you’re getting into, you could end up with properties that take a lot more work than you expected. Look to stress-test your financial situation and assess whether holding a property might become less affordable if your income or interest rates change.
If you are considering buying a property, make sure you can afford the carrying costs for at least the first year.
4) Not Doing Due Diligence
Proper due diligence is also something that many new investors fail to do. Knowing everything you can about the property you are looking at is imperative. This goes beyond the standard building and pest inspection and contract review. Work with property professionals to understand your chosen property’s limitations and possibilities before buying.
5) Not Measuring Progress
Beginning your property investment journey takes time, effort, and money. You need to know that you are on the right track. To keep yourself moving forward, you must monitor how well your properties are doing.
It’s essential to know how your properties are performing compared to your area’s comps. You can also evaluate your performance by looking at how quickly your properties are turning over, how much money you are making from each one and how many of your properties are cash-flowing.
Make Smart Property Investment Choices
Many of the principles that a successful investor follows are the same ones you would use for creating a successful business. If you are prepared, do the research and keep your eye on the long term, you can be successful in the long term too.
Coastal Advice Port Macquarie are extremely experienced in creating tailored investment portfolios for success. Are you an experienced investor looking for a fresh, well-managed approach to your portfolio, or are just starting out and needing expert guidance? Call us or book online to secure your complimentary first meeting with our advice team today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.