Property investment mistakes can quickly take the opportunity, and fun, out of investing for any budding property mogul.
You’ve worked hard to free up enough cash or equity and you’ve decided to dip into the property market.
But have you done all your homework?
At best, property investment mistakes might put an anchor around your dreams of capital gain.
At worst, they could cost you your home.
Don’t fall for these common property mistakes when you are on the lookout for the ideal investment property.
Not doing your research
When it comes to property investment, it is all about research.
Know the suburb intimately where you are considering buying.
Investigate the sale and rental prices over the past decade to try to determine trends compared with nearby suburbs.
Is it a sleeper that has yet to boom or has it already enjoyed a period of sustained growth?
Find out if any government or local council infrastructure projects are on the horizon and could impact the value of your investment.
Canvas the views of real estate agents or other property experts not personally invested in the sale of the property.
Many naive investors start the game on ‘gut feel’ or from the heart, and don’t do the data-driven research required.
And they pay the price.
Not focusing on location
It’s an old property buying adage and it still holds true for both home buyers and investors.
But there are two sides to this when it comes to investing.
Firstly, ensure your target property is in a growing area close to desirable facilities like schools, public transport, shopping centres and parks.
But secondly, don’t be deterred if the property is not one you would live in or in an area you prefer.
When you’re investing you’re looking for capital growth opportunity, not personal preference.
You should not disregard an investment just because you dislike the colour of the tiles or because it is not in your preferred side of town.
Too many would-be investors are led by the heart and not the head.
Overleveraging
Overleveraging or failing to buy within budget is another one of the biggest property investment mistakes people make.
Taking on too much debt without a clear plan for how it will be repaid can quickly put a sword through any investment project.
Don’t forget the hidden costs like stamp duty, legal fees, search fees and building inspections.
Then there are ongoing costs like insurance, land tax, council rates and building repairs.
Ensure there is always enough money in reserve by buying conservatively with a lower LVR (loan-to-value) ratio.
Not having an investment strategy
Don’t rush blindly into buying an investment property.
Just like starting a business, you need to create a plan or budget, detailing all the costs and future projections.
Ask yourself the following questions:
- What are your long-term wealth goals and what role does this property play?
- Is this a property you plan on living in down the track?
- Do you wish to acquire more investment properties?
- Do you plan on selling this property?
Pay careful attention to your cashflow management, accounting for all property-related expenses.
Be conservative when factoring in your rental yields.
Don’t forget any tax deductions or implications including capital gains tax.
Poorly structured property finance
Investors often make the mistake of taking the first loan on offer from their bank. But when you’re in the investing game, your financial strategy, structure and loan product are absolutely crucial.
It’s not just about things like interest rate, that’s the things that banks will try and draw you in with.
Instead, you should be looking for finance opportunities that increase your borrowing capacity, reduce risk and free up cashflow.
This is why it is crucial to work with an experienced mortgage broker who can not only help you strategise but canvas the thousands of loan products on offer to help you get the right deal.
Neglecting property management
Trying to personally manage your property without the necessary skills can be a very stressful experience and could quickly take all the fun out of property investing.
Part of that is leasing to bad tenants which can lead to unpaid rent and potentially even damage to your property.
Professional property managers handle all of this for you and implement a rigorous screening process to ensure reliable tenants.
Not seeking independent professional support
When you’re about to make the biggest investment of your life, it is crazy, almost reckless to go it alone.
You need your eyes wide open and the best way to avoid all of these costly property investment mistakes is to engage the services of a professional financial advisor and mortgage broker.
A financial advisor can run the rule over your potential investment, ensuring you are not making any decisions based on emotion rather than good judgement.
As mentioned, a mortgage broker will find you the ideal mortgage package.
That means not just the best rate but an investment loan with the features and facilities you need.
Get started the right way
When it comes to investing in property, Calder is your one stop shop.
Calder Finance Broking are specialists in the property finance business.
We’re work closely with property investors and have built strong connections with a multitude of lenders for your benefit.
We can secure you the very best investment loans tailored specifically to your goals and needs.
Calder Wealth Management is laden with experienced professional financial advisors who are partner with you in your wealth strategy.
They can advise you on the wisdom of your chosen investment property in terms of its location, price, potential rental income and capital growth.
They are wealth creation experts and pride themselves on leading their clients into the future with structure, financial stability and confidence.
Contact Calder Wealth Managment and Calder Finance today to discuss all of your financial needs and mortgage requirements.
The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.
Written by David Titley from Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.
