People from all walks of life invest in property today.
It shouldn’t come as a surprise because real estate is a great investment choice if you’re looking to grow your financial wealth. After all, property is a tangible asset that can provide security while generating a stable cash flow and secondary income.
However, this all depends on making smart and well-informed decisions about the right properties to suit your budget and financial goals.
To help you, here are 7 common property investing mistakes to avoid when building a portfolio.
The 7 Deadly Sins of Property Investors
1. Automatically buying an investment property close to home
Selecting a property location based upon the advice of friends or family, rather than seeking independent information, is a recipe for disaster.
Instead of simply choosing to invest in property that’s close by, keep an open mind, as a lot of good investment opportunities can be found throughout Australia and you could have the potential to earn great returns just by broadening your horizons.
You should always do your research as it allows you to take into account population trends, market trends, demographics, median prices and rental vacancies. Seeking the help of a Buyer’s Agent will also help you gather the necessary information you need.
2. Being too emotional
Property investing is like doing business – it’s all about the numbers, the deal and the return on investment. You have to leave emotions behind, so you can negotiate hard and walk away from options that won’t maximise your returns.
When choosing the perfect property, make sure to focus on what the majority of people would want. Do not dwell on picking something quirky that you personally prefer, as it can be harder for you to sell in the future.
3. Confusing investment and taxation strategies
You can claim certain tax deductions from investing in property – but this shouldn’t be your sole priority. Negative gearing only provides short term cash flow, so making property choices based on tax-minimising strategies is not a long-term approach.
4. Ignoring the property clock
You shouldn’t treat all properties or locations the same.
Each Australian state is at a different point in the property cycle, and within each state, there are hundreds of suburbs at their own points of the cycle too.
The best way to maximise potential capital growth is to buy properties that are at the bottom or in the recovery stage.
5. Buying the wrong type of property
It’s counterproductive to buy a huge five-bedroom home, if the average renting family in your chosen area is only looking for a 3 or 4-bedroom house.
To avoid chances of high vacancy rates or low returns, it’s important to research the trends in local household structure where you are buying property, so you can attract good tenants fast.
6. Trying to flip property for a quick buck
Revamping a house to try to earn a huge profit is not always a smart strategy. Too often, it’s just the state governments, solicitors and selling agents who benefit from this through stamp duty and transaction fees – not you.
Unless you’re a qualified builder with a heap of free time and lots of patience, don’t consider this strategy!
7. Handling property management on your own
Property management is not simple as it seems – handling tenancy legislation can be a minefield that may put you at risk and trying to deal with tenant matters has always been a tedious process.
You also have to consider performing routine inspections, dealing with bond lodgement and managing maintenance issues.
It’s in your best interest to simply let a reliable property management company handle your investment, so you can focus on growing your wealth.
Property investing can offer great returns – when done well.
This is why it’s important to learn from these common mistakes so you can avoid making poor decisions that you may regret in the long term.
To be even more prepared, you can work with a reliable buyer’s agency like Worth Property Investing.
How can Worth Property Investing help you buy an investment property?
At Worth Property Investing, we partner with you throughout your investment journey.
Led by Simon Read, we are passionate about building a strategically sound and highly diversified property portfolio which can help you fulfil your dreams.
As your trusted licensed property Buyer’s Agents, our experienced team guides and supports your property investing education, so you can achieve your property goals sooner.
Worth Property Investing can help you find the right property to meet all your requirements when considering your next purchase. We use real facts, due diligence and solid research to locate the right investments, and we have a proven track record to help you succeed.
CLICK below to download our free TOP 10 REAL ESTATE INVESTMENT RULES e-book today
You’ll get all the essentials you need to understand the role solid research plays in achieving property success.
Don’t put it off any longer – contact Worth Property Investing today and start achieving your property investing dreams!