Here's why property investment is not always a ticket to getting rich quick
9 pitfalls you should avoid when investing in property.
It's no secret that you can make a lot of money from investing in property. But, let's be honest, it's not always an easy feat. The most successful property investors spend weeks if not years doing their research to understand the market (and their finances), so that they can make smart financial decisions for the long term.
While we often hear property investment good news stories such as property prices doubling in value every seven to 10 years it's not always the case.
If you're thinking about developing your investment portfolio, here are 10 killer mistakes to avoid when investing in property.
MISTAKE 1. LISTENING TO THE WRONG ADVICE >> It's true, many people consider themselves 'real estate experts' these days. But, just because they've had a good experience, or someone watches Location Location Location Australia on TV, it doesn't mean they are knowledgeable or experienced when it comes to investing in property in your chosen suburb or price range.
MISTAKE 2. NOT UNDERSTANDING THE WORST CASE SCENARIO >> Sure, we don't like to think of the negatives, but when it comes to property investment or any major financial decision knowing your best and worst case scenarios (and planning ahead for them), is vital for your money management success.
MISTAKE 3. BELIEVING PROPERTY DOUBLES EVERY SEVEN TO 10 YEARS >> Put simply, it doesn't always! While some suburbs are booming, others have experienced price plateaus, and even declines. Visit our Property Solutions hub for a range of property reports that will help in your research of property valuation, depreciation and suburb sales trends.
MISTAKE 4. WAITING TO BUY WHEN THE PROPERTY MARKET CRASHES >> If you wait for the perfect time to buy an investment property you could miss out. The timing should be determined on a whole range of factors relating to your personal financial situation and goals not just when (or if) house prices bottom out.
MISTAKE 5. BUYING A PROPERTY TO REDUCE YOUR TAXABLE INCOME >> Sure, if you have an investment property you may enjoy the perks of some tax breaks, but it's not the be all and end all especially if you have no cash flow to live the life you want.
MISTAKE 6. LOOKING FOR THE PERFECT PROPERTY >> There is no such thing. It's about buying the right investment property available to you at the time.
MISTAKE 7. BUYING A PROPERTY JUST BECAUSE IT'S ATTRACTIVE TO TENANTS >> Satisfying your future tenants is a good idea, and will help you command the highest rental rate possible, but the property must meet your personal financial and lifestyle goals, too. There's no point putting yourself under mortgage stress for the benefit of someone else.
MISTAKE 8. NOT HAVING FINANCE APPROVED >> Investing in property and the right property takes time and careful financial consideration. Rushing in, especially without having your finances approved can be risky, not to mention costly if the bank declines your application after you've already made an offer.
MISTAKE 9. PUTTING TOO MANY CONDITIONS ON YOUR PURCHASE OFFER >> While placing some conditions on your offer such as 'subject to finance' or 'subject building and pest inspection' is reasonable, making too many demands can make life difficult for everyone involved. Remember, once the contracts have been exchanged and your deposit paid, the contact becomes legally binding, and abandoning the agreement can be complicated.
Avoid making a decision you could regret, speak with one of our expert lending consultants about your property investment goals today. Call 1300 780 440.
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