Expert Advice with Brett Warren 21/09/2017Investing in property is a big undertaking.
There is so much planning and thought that goes into it, to the point that many of us feel exhausted before we’ve even committed to the purchase and bought a piece of real estate!
Investing in any asset is a risk, and it can make even the steeliest of us feel uneasy.
If you go about it the right way, investing can be a smart and sustainable way to give yourself financial freedom and a more enjoyable lifestyle – but investments can also fail.
Here are the four key reasons why investors can fail to succeed in the property game, and how you can avoid making the same mistakes.
1. Failing to plan
Without proper planning in all aspects of an investment, you are almost guaranteed a failed investment.
Before you take the plunge, you have to research every possible angle and avenue.
Whether you’re investing in property for passive income or an uplift in property value, the first thing you need to do is examine your income and liabilities.
Use that as a starting point for your property investment plan so you can focus on finding properties you can afford, without putting yourself under financial pressure.
2. Being impatient
Property investment can bring great success, but it doesn’t happen overnight.
Those who rush into investing without taking the time to consider their options and look for the best choice will fail, and quickly.
Successful investing requires a smart mindset and a lot of patience, so go into your investment knowing that results will take time to achieve.
Market prices fluctuate, interest rates rise and fall, and new properties come on the market all the time.
If you are careful and precise, you’ll have a much better chance of enjoying a rewarding property investment career.
Remember Warren Buffet’s great quote: “Wealth is the transfer of money from the impatient to the patient.”
3. Refusing help
Investing isn’t cheap, and so it can be so tempting to cut corners where you can in order to save money.
But without the help of property experts, you leave yourself open to many potential (and costly) mistakes.
So although it might be pricey, consider hiring independent property professionals who can make the whole process much easier.
It might be a property investment advisor who looks at your assets and income before advising you on the best decisions for your circumstances; a mortgage broker, who acts as a go-between for you and the bank in order to negotiate the best home loan rates; or a buyer’s agent, who takes on all the researching necessary when you’re actually searching for your investment property.
4. Having high expectations
It’s great to know what you want in your property, but if you hold out for the ‘perfect property’, you might never find it.
Investing a large sum of money into anything is nerve-wracking, so it’s no surprise that you want the end result to be perfect.
But there comes a point where you have to create a list of realistic criteria, so you can take action towards your property goals.
Also keep in mind that as a landlord, you’ve got to look at it from a target tenant’s point of view. Take all the emotion out of the decision, and make your mind up according to the market.
Similarly, you need to consider what demographic would like to live there – what would potential owners who would buy similar properties desire?
Brett Warren is the Senior Property Strategist at Metropole Properties in Brisbane and uses his 12 plus years property investment experience and economics education to advice clients how to build their portfolios.
He is a regular commentator for Michael Yardney's Property Update.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.