Your Investment Property forum is the place for positive industry interaction and welcomes your professional and informed opinion.

2 common ways property investors lose money

Notify me of new replies via email
Your Investment Property | 22 Oct 2012, 09:00 PM Agree 0
As asset classes go, property is the smart choice, but investors who have bought property through these two vehicles have often had to wave their healthy bank balances a tearful goodbye
  • John | 23 Oct 2012, 12:30 PM Agree 0
    Personally, I've bought off the plan to great success. I bought a three bedroom townhouse in Melbourne and by the time it was built it had already increased in value. I'll admit that I was a bit lucky though, if values in the whole of Melbourne hadn't been going up as they were at the time I might have been in trouble
  • Paul | 23 Oct 2012, 01:31 PM Agree 0
    Yes, you'd have to be crazy to buy off the plan in my opinion
  • Paull | 23 Oct 2012, 01:48 PM Agree 0
    Hmm, while I can understand why some people would say these things, I disagree with most of what this article says. Just because other people have lost money this way doesn't mean you can't make money if you do it right...
  • Phillipa | 23 Oct 2012, 01:53 PM Agree 0
    Why the beef with rent guarantees?
  • Nelly | 23 Oct 2012, 05:49 PM Agree 0
    Oh! how I wish we had researched this information before we bought an investment unit in 2003. It's in Chatswood (NSW) you would think this area, with all its amenities, reasonable proximity to the city, etc. would have capitalised a lot in 9 years, right? Dead WRONG! not only has it only gone up a mere $30,000 in nearly 10 years, we lost a lot of money with low rents, ridiculously high levies and obviously, as we now know, an inflated purchase price. We have certainly learnt from our mistake and console ourselves on the positive outcome of other purchases which, without the help of any "developer consultants" performed extremely well. Lesson learnt: trust your instincts, do the sums and rely on your own good research and experience rather than leaving it all to the so-called experts!
  • Julie | 23 Oct 2012, 08:16 PM Agree 0
    You do need to do your research and make sure that when you buy a property off the plan that you are buying at the bottom of the cycle in that city. I don't buy in a place I 'think' would be a good area to invest. I look at the infrastructure and other government spending that's happening. This provides jobs and growth. I am a conservative investor and don't mind purchasing off the plan using this criteria. I buy and hold for the long term.
  • Madeline Lu | 24 Oct 2012, 11:45 AM Agree 0
    Reply to Paull: "I disagree with most of what this article says. Just because other people have lost money this way doesn't mean you can't make money if you do it right" Isn't that exactly what this article is saying? If you do it right you can make money, but a lot of people do it wrong. So here are some tips that may help?
    I think this was an informative article. Thankyou to the writer that thought to put it up.
  • Bill Brixton | 27 Oct 2012, 09:38 AM Agree 0
    Something I think that's not mentioned, lets be honest, is house and land packages... nobody says anything about them but you can lose a lot of money with them. my advice is to avoid them
  • Uzzie | 27 Oct 2012, 06:34 PM Agree 0
    House and land packages? Definitely not in the same category.
  • Uzzie | 27 Oct 2012, 06:36 PM Agree 0
    Not only can you get some great deals on house and land packages, there is little to no risk. The only way you'd lose money is the same way you'd lose money with any investment property - if you chose an area that is not going to perform well for prices etc
  • TheRealDeal | 29 Oct 2012, 10:26 AM Agree 0
    H + P packages: the first home buyer gets a (comparatively) cheap new home, the developer makes money building, selling and often financing the home, and the State Government gets its revenue while simultaneously easing congestion in the city.
    A couple of months ago I spent a day visiting some of these satellite suburbs on the fringes of Melbourne. Yet I didn’t go to the latest developments being pushed relentlessly on the telly.
    Instead, I stopped a few kilometres short and visited the first home buyer suburbs of 10 and 20 years ago to see how things were faring.
    Not well seemed to be the general consensus.
    The strategy most young people had when they moved to these suburbs was to get their foot in the door of the property market. Then, in a few years when they’d built up some equity, they could trade up and move closer to the city.
    Yet the equity never arrived.
    Instead, developers continued buying up large parcels of land further out and building new groves, ridges and sanctuaries, thereby depressing the prices of their existing homes, which were now in suburbs that had lost the marketing gloss.
  • Impi | 29 Oct 2012, 11:25 AM Agree 0
    So what are the advantages and disadvantages of a house and land package? Is it better to buy your own land and then build your house or is it better to get a house and land package?
  • Bill Brixton | 30 Oct 2012, 08:27 AM Agree 0
    Impi, what's going to happen is that youll buy the package and but therre is going to be so much other properties coming onto the market over the next few years that you wont see any capital growth in that area so its a waste of time
  • Bill Brixton | 30 Oct 2012, 08:29 AM Agree 0
    Another thing... my experiences with builders in these things has not been good.
  • Ponty | 02 Nov 2012, 05:59 PM Agree 0
    Can anyone tell me of any other ways you can lose money??
  • james hall | 04 Nov 2012, 09:51 PM Agree 0
    I’ve heard it said that property investment is simple, but it’s not easy.
    Most property investors fail
    Putting it bluntly…most property investors fail to reach their objective of financial freedom.
    And my concern is that in the current turbulent economic environment this will only get worse.
    The good news is that there is a way to make property investment work and I’ll explain how. But first let’s look at what not to do…
    Currently our property markets are a confusing place, yet property investors are still being bombarded with messages of easy money which has lead to a worrying trend where some investors are so keen to do something, in fact to do anything, that they are heading for property investment disaster.
    Even if they don’t have enough money, or haven’t developed the discipline to save, or they’ve already borrowed to their limit, some investors feel they’ve got to do something and in their bid to get into the property market they are now speculating rather than investing.
    Of course I understand why they are keen to share in the profits others have achieved through property, but sometimes the right thing for an investor to do is nothing.
    I’ve made more money by the things I’ve said no to than the things I’ve said yes to. That’s because all my investments have been made as part of a planned strategy.
Post a reply