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How first time investors fail

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Your Investment Property | 13 Nov 2012, 10:10 AM Agree 0
A large portion of investors never make it past one or two property purchases – and it’s not because of their personal income, it’s because they made the following mistakes
  • Greg | 13 Nov 2012, 03:02 PM Agree 0
    4. Not getting pre-approval for a mortgage: ???
    YUP. I got a pre-approval card from Aussie Home Loans at Hurstville in 2000. Thought it was a great idea until they didn't honour it. Turned out the Aussie loan guy didn't bother doing an evaluation on our property. Just went off an evaluation we had from another lender. Aussie's evaluation came in at a lower value, so they cancelled the ‘pre-approval card ” and the loan didn't proceed. Aussie stuffed us around for 3 weeks before telling us it was cancelled. To add insult, they took my money, a $600 application fee. As far as complaining, they had a great system of sending you straight back to the same loan guy who didn't give a toss. LOVE YA WORK AUSSIE JOHN! Really enjoyed the stress you put us through. Luckily the property didn’t sell to someone else, and we ended up getting the loan through RAMS, their evaluator agreed with the Eval we had.
    So beware. Pre-approvals can disappear quick smart. A loan is never guaranteed until it's settled.
  • Property Mavens | 13 Nov 2012, 03:22 PM Agree 0
    Using the wrong realtor:

    I think you meant to say that the buyer needs to be aware that the Selling agent DOES NOT represent their interests and legally represents the sellers interests. Therefore they should seek their own INDEPENDENT representation via the use of a Buyer Agent/Advocate whose role it is to ensure they don't overpay, insert clauses in the contract to benefit the buyer ( NOT the seller), they have the property inspected before purchase and that they are buying the right property for the right reasons.

    Anyone that doesn't understand that the selling agents job is to get as much money for the vendor as possible, while using all the clauses in favour of the seller, is likely to get themselves in trouble!

    If you were in court and being charged with a crime, would you get independent legal representation or would you hope the prosecutor was a nice guy who looked after you ?? If you would get legal representation, then you should also get a Buyer Agent to protect you when spending $100,000's dollars !
  • Greg | 13 Nov 2012, 03:45 PM Agree 0
    8. Not reviewing the purchase contract closely:
    Make sure you add everything into the contract that is nailed or not nailed down. Ceiling fans, exhaust fans, air con, skylights, garden features, pool pumps, rainwater tanks, letter box, solar panels, everything! My solicitor said he's seen so many things nicked over the years after settlement like tall TV masts and boosters. If it's not listed in the contract, it's fair game for the seller to take it.
    Always visit the property on the day of settlement with the agent, and before settlement time. Again it's to make sure nothings been removed that shouldn't have been, and the properties still standing.
  • Pascoe | 13 Nov 2012, 05:12 PM Agree 0
    Westpac did the same to me in regards to a pre-approval. Said it was all good and ready to go to only stall for 3 weeks and finally say, no its not approved. The only reason I am still with Westpac is because I havn't had a chance to refinance yet. Most expensive and inflexible of all the banks.
  • Andrew Sansome | 13 Nov 2012, 09:17 PM Agree 0
    Useing all or most of your equity as you go along improveing your properties to purchase more. This would be the number 1 error in moving forward combined with too much haste..............I know first hand as Ive done it myself. Keep your LVR at or under 60% and you wont go too far wrong, over that and you will have a short existence in property investing, particularly for the future economic climate to come, reduce your debt..Maybe not what anyone wants to hear but you asked for a comment.................
  • Francis | 14 Nov 2012, 10:28 AM Agree 0
    Very interesting seeing we have all these investment property guru's telling everybody how easy it is and will only cost you $25 a week. Wish it was that easy. As a long time property investor with 10 properties in the family I would say the biggest problem especially for first time investors is under estimating the actual costs per month. What if their is no tenant for a while, extra repairs etc. Never ending. But saying all that property investing is still the best way of the average person getting seriously rich. So go for it but make sure you have plenty of spare money in the budget because you will certainly need it
  • Greg | 11 Jan 2013, 11:42 AM Agree 0
    Another high impact issue is Taxation. Do you purchase your investment property as Joint Tenancy or Tenancy in Common?

    Joint Tenancy means ownership is evenly divided and if one person on the property deed dies, the property automatcally becomes wholly owned by the survivor. Where Tenancy in Common allows you to specify the percentage of ownership by each person on the deed. It's that percentage the Tax Office uses to determine how much income or loss, and Capital Gain or Loss a person pays.
    Whatever you choose impacts two types of Tax you will pay. Capital Gains Tax when you sell the property and Income Tax via negative or positive gearing in your yearly tax return.

    If one person on the deed is a House Mum/Dad with no income, it makes for an interesting decision with percentage of ownership. Choose wrong, and you could get strung/stuck with paying too much tax when you sell or while your renting it.

    My advice is to ask MORE than one Accountant what you should do in your instance. I say MORE than one, because Accountants are human and I have been given the wrong advice in the past. Ask successful business people which Accountant they use, rather than using the yellow pages.
    A brilliant Accountant will save you a fortune in Taxation, that can be saved up and used for your next property purchase.
  • Eos Property | 13 Jan 2013, 11:42 AM Agree 0
    Bigger reason is a lack of an end point. In other words 'how is property going to work for you as a financial vehicle'

    Know the answer to this question and you will know which property suits your strategy.
  • kabeer | 29 Jan 2013, 11:38 PM Agree 0
    Been renting for the last two years my personal experience is that australia is one of the worst place where one can be renting... So bascally it is a place where it can be benefetial for the property investors... But that is only the current status... dont stretch your budget only based on the rental return... you should plan in such a way that that the mortage would be able to survive even if you hit a 10%(some people would say it is big %) lower rental.
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