Common Mistakes Of Rookie Property Investors
When done the right way, investing in property can be highly lucrative. However, for every success story, there are many Australians who have not done so well.
There are typically several reasons behind this. However, the most common mistake is when an investor purchases a property without any help from an industry professional.
Smart investors understand that to be successful in this game, you need to have an experienced team around you. A strong team can help you through every stage – locate a profitable property, set up a suitable loan repayment schedule, find a reliable tenant, and review the plan moving forward to ensure you stay on track to meet your goals. Trying to do everything yourself can lead to disaster.
Other common errors Aussies make when investing in property
Not having a plan
You need to have a strategy before you invest – and this strategy should be developed with your goal in mind. Figure out why you are investing before you do it. Is it to retire early? Is it to generate a passive income so you can spend more time with your family? Owning property is not the end result, but merely the means to help you achieve your goal.
Buying with their heart instead of their head
Too many Aussies purchase in an area they would like to live. Remember: it’s an investment, not your dream home. Don’t let emotion get in the way. Instead of choosing a suburb you want to live in, look for an area which is likely to experience growth and has a strong demand for rental properties.
Buying in an area with weak growth
A lot of first-time investors assume their property will grow in value regardless of where it is. This is not the case. You need to take into account all those aspects we discussed earlier – population growth, infrastructure, amenities – when looking where to buy. Otherwise, you may end up with an investment that actually decreases in value.
Choosing the wrong loan structure
You will likely pay hundreds of thousands of dollars in interest over the lifetime of your loan. How you structure your mortgage can reduce this amount significantly.
Panicking and buying just for familiarity
Sometimes there's an internal pressure where you instinctively know you need to get onto the market (from an investment perspective) but don't have the time or data to know where to buy. This can lead to a snap decision to buy in the neighbourhood where they already rent or have a family home, which might not have any likelihood of giving you capital growth or good rental yield.
Not taking advantage of tax exemptions
Investing in property can allow you to pay less tax to the Government. There is nothing unethical about doing this. It is entirely legal. Why not take advantage of it and save yourself thousands of dollars?
Reacting to advice blindly
Come tax time your accounant or financial planner may strongly advise you to use property as a vehicle to pay less tax and build your wealth, but as this is not their field of expertise they cant support you in sourcing and securing the right investment property. While the advice is well intended you cant simply just follow their suggestion without doing the right due diligence and get the rest of the team around you.
Your property investment journey starts here
For the last two decades, I’ve helped my clients to build their wealth through property investment. I have the skills, experience and qualifications to drive success and the track record to prove it. I only work with the best, most qualified, experienced and genuine support team like Brokers, Accountants and Conveyancer.
Book a wealth accelerator call and together we can formulate a property investment strategy tailored to your goals. It’s the faster, smarter way to grow your wealth; putting money in your pocket without you having to lift a finger.
The information in this article is general in nature and does not constitute financial advice. You should seek independent legal, financial, taxation or other advice for your own unique circumstances.