Eight mis­takes ev­ery in­vestor makes

Wangaratta Chronicle - North East Property Guide - - AGENTS CHOICE | PROPERTY GUIDE -

The road to suc­cess­ful prop­erty in­vest­ing is lit­tered with the ghosts of past mis­takes, with each one tak­ing its toll on your fu­ture wealth. But it needn’t be that way.

Here are the top eight mis­takes real es­tate in­vestors make – and most im­por­tantly, how you can avoid them.

Mis­take #1: A nar­row fo­cus

Par­tic­u­larly in the cur­rent cli­mate, nar­row­ing your fo­cus to prop­er­ties in your own city could be se­ri­ously lim­it­ing your po­ten­tial as an in­vestor. Re­gional mar­kets can of­fer ex­cel­lent op­por­tu­ni­ties for prospec­tive land­lords, as do smaller ‘big’ cities such as Ho­bart and Launce­s­ton. Don’t be afraid to look fur­ther afield and ex­am­ine the pos­si­bil­i­ties avail­able out­side your home­town – you may be pleas­antly sur­prised.

Mis­take #2: Not hav­ing a back-up plan

Own­ing an in­vest­ment prop­erty sounds great, and it is – while the ten­ants are dili­gently pay­ing their rent and noth­ing is go­ing wrong. But what hap­pens when you’re faced with a few months of va­cancy, or a costly ma­jor re­pair? If you’re re­ly­ing on rent to pay your mort­gage and don’t have an emer­gency fund, events like this could crip­ple you fi­nan­cially. To pro­tect your­self, try to save at least three months’ worth of re­pay­ments in a sep­a­rate ac­count. You should also put money aside reg­u­larly for main­te­nance and re­pairs.

Mis­take #3: Scrimp­ing on in­sur­ance

Tak­ing out an ap­pro­pri­ate level of build­ing and land­lord in­sur­ance is crit­i­cal, even if you know and trust your ten­ants. Ac­ci­dents can hap­pen, and be­ing ad­e­quately in­sured is a must. You may find a bet­ter deal on a suit­able prod­uct by go­ing through a bro­ker or com­par­i­son web­site, so shop around to en­sure you have great cov­er­age at a good price.

Mis­take #4: Fail­ing to re­search

In the in­ter­net age, there re­ally is no ex­cuse for fail­ing to re­search prop­erly. There are plenty of re­sources on­line that will guide you through me­dian rents, va­cancy rates and sub­urb de­mo­graph­ics, and talk­ing to lo­cal agents will give you a good pic­ture of what ten­ants in the area are look­ing for. Try View’s Price Es­ti­mate Tool.

Mis­take #5: Not putting your­self in the ten­ants shoes

Buy­ing an in­vest­ment prop­erty means buy­ing a home that ten­ants want to rent – not a home you’d love to live in. Rather than seek­ing out prop­er­ties that meet your own cri­te­ria, speak to lo­cal prop­erty man­agers about the kinds of dwellings that are pop­u­lar with renters in the area, and the value-adds that are im­por­tant to them, such as a dish­washer or air con­di­tion­ing.

Mis­take #6: Fall­ing in love with a prop­erty

In­vest­ing is a to­tally dif­fer­ent ball game to buy­ing a house for your fam­ily to live in, and fall­ing in love with the prop­erty is among the worst mis­takes you can make. Don’t al­low your emo­tions to cloud what should be a clear-cut busi­ness de­ci­sion. Choose a prop­erty with a good rental yield and solid growth po­ten­tial, and treat it like any other busi­ness as­set by us­ing your head, not your heart. This way, you also stand to be less dis­ap­pointed if things turn sour, such as when a dodgy ten­ant trashes the place.

Mis­take #7: Try­ing to do it all your­self

A good prop­erty man­ager can be worth their weight in gold when it comes to get­ting the best out of your in­vest­ment prop­erty. 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 is in­valu­able when it comes time to in­crease the rent or make im­prove­ments to the prop­erty to at­tract ten­ants.

Mis­take #8: Hop­ing to “get rich quick”

If you’re hop­ing to build your wealth through in­vest­ing in prop­erty, you need to 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. If you’re seek­ing im­me­di­ate grat­i­fi­ca­tion, prop­erty prob­a­bly isn’t the as­set class for you – for ev­ery lucky mil­lion­aire mogul there are thou­sands of in­vestors who lost it all be­cause they gam­bled too much, too soon.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.