Seven big in­vest­ing mis­takes every­one can avoid

Shepparton News - SN Local Real Estate - - OPEN HOMES AND AUCTIONS -

There are plenty of things that can go wrong – the good news is that with a bit of plan­ning and com­mon sense you can avoid a lot of them.

Start with these seven top in­vestor mis­takes and how to avoid them:

Mis­take #1: Not hav­ing a back-up plan

Own­ing an in­vest­ment prop­erty is great while the ten­ants are pay­ing their rent and noth­ing is go­ing wrong. But if you’re re­ly­ing on rent to pay your mort­gage and don’t have an emer­gency fund, events like a long va­cancy or costly re­pair could crip­ple you fi­nan­cially. To pro­tect your­self, put aside at least three months’ worth of re­pay­ments.

Mis­take #2: Scrimp­ing on in­sur­ance

Tak­ing out an ap­pro­pri­ate level of build­ing and land­lord in­sur­ance is crit­i­cal. Whether your ten­ants are ter­ri­ble or your best friends, ac­ci­dents can hap­pen, so make sure you are cov­ered for when they do.

Mis­take #3: Fail­ing to re­search

There is no ex­cuse for fail­ing to re­search prop­erly – good lo­cal real es­tate agents and on­line re­sources will guide you through me­dian rents, va­cancy rates and suburb de­mo­graph­ics.

Mis­take #4: Not putting your­self in the tenant’s shoes

Speak to lo­cal prop­erty man­agers about what is pop­u­lar with renters in the area, and the value-adds that are im­por­tant to them, such as a dish­washer or air­con­di­tion­ing. Fall­ing in love is a recipe for bad de­ci­sion-mak­ing. Choose a prop­erty with a good rental yield and solid growth po­ten­tial, and then re­mem­ber to al­ways treat it like a busi­ness as­set.

Mis­take #6: Try­ing to do it all your­self

A good prop­erty man­ager can be worth their weight in gold. They’ll han­dle ev­ery­thing from ad­ver­tis­ing, vet­ting ten­ants and or­gan­is­ing pa­per­work, to col­lect­ing the rent and per­form­ing rou­tine in­spec­tions. They are ex­perts in deal­ing with tricky ten­ants and their lo­cal mar­ket knowl­edge can be in­valu­able. Ban­ish ideas of overnight suc­cess from your mind – whether it’s through longterm cap­i­tal growth, pos­i­tive cash flow or buy­ing prop­er­ties to flip and sell for a profit, tim­ing and good man­age­ment are es­sen­tial and overnight riches are highly un­likely.

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