Posted on 10/05/2016 by Todd Pearce
We all make mistakes, it’s a fact of life no matter how hard we try to avoid it. We also make mistakes when it comes to investing whether it be money or property. There are ways to avoid making these mistakes and ensuring that your investment is providing the best possible outcome and financial success! Listed below are the top five mistakes property investors make when purchasing.
Mistake 1: Falling in Love with the Property
When you purchase an investment property, you are purchasing a property for someone else to live in. A tenant may or may not love a property as much as you do and they may or may not love the features which you found so desirable. You must decide on your target rental market and find a property which best suits their needs.
Mistake 2: Not Seeking Expert Advice
There are so many accountants, solicitors, property brokers, financial consultants and other experts who can advise investors on finances etc yet still so many investors fail to take advantage of the advice and information which these experts can lend. We can’t all expect to have a full understanding of the real estate market or financial market – so why not leave it up to the experts!
Mistake 3: Not Having a Risk Strategy
We all have high hopes for our investment property and usually believe things won’t go wrong. But what will happen if it can’t be tenanted, what happens if there is an accident at the property, what if interest rates go up, what if your circumstances change. You simply cannot afford to own an investment property without a back up plan. You can’t be expected to know the future just as you can’t expect not to have a risk strategy.
Mistake 4: Not Performing the Research
Researching the area surrounding the property is just as important as researching the property itself. The property’s location to schools, shopping centre, medical facilities and transport are major factors on the success of your investment property. Don’t forget to research the capital growth of the area, upcoming council plans and the areas general vacancy rates.
Mistake 5: Not Crunching the Numbers
Again, there are experts who can help you ensure that you are never left out of pocket due to your investment property. Rounding up or guesstimates are not enough to ensure your purchase is a financial success rather than a burden. Contact your accountant or financial advisor to gain advice on negative gearing, tax benefits and the total cost of purchasing an investment property.