So, your first investment property failed. Now what?

Expert Advice by Paul Wilson

So, your first investment property failed. Now what?

Any failure, especially a $250,000+ failure hurts… a lot.

But this doesn’t just happen overnight. Those who’ve had the unfortunate experience of a investing in a poor-performing property would have known for quite some time that the property’s fortune couldn’t be turned around, no matter how hard they tried.

It’s not an ideal situation to be in, but the only way to get out of it is to take action. So, if you’re feeling a little lost or disheartened, follow the steps below and you’ll be back to investing with confidence in no time!

1. Accept that it happened, and that it failed
Just with anything in life, if you hold onto the “coulda’, shoulda’ woulda’s” you’re going to be unhappy. Living in the past, or ignoring the fact that you failed will get you nowhere fast. My advice? Don’t be so hard on yourself. We’re all human and we all make mistakes, but in the next few steps we’ll cover if and how you could have avoided the failure in the first place.

2. Debt management - stat
Unless you paid for your investment property in cash, chances are you’re in a substantial amount of bad debt. At the beginning of your investment, you would have classified it as good debt as you believed it was being invested in an appreciating asset, but now that’s not the case and it has changed to bad debt. You will need to consult a professional financial advisor to see how you can manage your loan repayments as you most likely would have taken the loan out on the premise that the rent would cover the repayments. Without an external cashflow source or a wage big enough to cover the shortfall, this situation can get out of control very fast; especially when you’re not in the best mindset.

3. Assess what went wrong
Your first investment property could have failed for a number of reasons, some due to human error of judgement, and some due to uncontrollable external factors.

Chances are there will be a mix of variables that could have contributed to your failure, but some of the common causes are:

Human error

  • Not being thorough with due diligence: Were you lazy? Did you know what to look for?
  • You were rushed: Were you strapped for time? Did you jump in head-first without asking the right questions?
  • You invested purely on marketing and media hype: Did you do your research? Did you consult a property professional?
External factors

  • The local area in which you invested overheated
  • The market flooded a short time after you purchased your investment property
  • A number of local infrastructure projects planned for the area fell through
Once you’ve assessed what went wrong, figure out how you can put measures in place to ensure it doesn’t happen for your next investment, which leads me to my last step.

4. Get back on the horse!
You’re never going to taste property investing success if you don’t get up and try again. Once your ego has recovered and you’ve plucked up enough courage to start searching again, I promise you’ll find that same determination you felt in the beginning. It might take a while for your confidence to build up, but to get you on the right path and eliminate potential risks, you could team up with a trusted, independent advisor who will guide you through the investing process.

Experience is expensive, especially in the property investment world – but that’s the beauty of learning from someone else’s mistakes. Take that opportunity with your head held high, and in a few years’ time you’ll be laughing about this whole ordeal. 


Paul Wilson is an Independent Property Investing Expert and the founder of We Find Houses, Educating Property Investors & We Find Finance. Paul has been educating and coaching investors since 2001. Paul provides valuable, independent guidance and support by teaching strategies on how you can invest successfully while protecting yourself from commission hungry sales agents and property spruikers. Protect yourself with knowledge, contact Paul today for a complimentary consultation on 1800 600 890 or email

Read more expert advice articles by Paul

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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