7 Common Mistakes to Avoid When Buying Property

Majority of the people who enter the property investment market don’t succeed. They commit mistakes that can easily be avoided.

Here are eight mistakes that are easily avoided and help you successfully navigate the path towards property investing.

1. Choosing the wrong loan structure and lender

Many investors choose a loan type that works against them rather than for them. This can have serious consequences later on. Similarly, choosing the wrong lender for their particular investment property can have negative effects on their ability to secure a loan for their next property.

2.  Lacking an even strategy of capital growth and cash flow

Focusing only on capital growth can compromise cash flow, causing the investor to eventually lose the capacity to borrow and unable to keep growing their portfolio.

Similarly, focusing on higher yield property can compromise more ideal locations for capital growth, leading to less wealth being produced in the future.

3.  Not doing research

Being myopically minded, people buy where they are familiar with and take shortcuts when they decide on a property, foregoing to spend time on doing further research that would benefit them.

Buying where your home is, and where you are at ease can often result in considerably limited opportunity.

4.  Losing patience with your investment and selling too soon

If you believe you bought the perfect property, it is smart to hold on to it. Property investment is long term.

If you are not developing or subdividing or renovating for profit, you usually have to keep the property for a while to let it profit from the property cycle instead of being badly affected by the cycle it is in.

5.  Waiting for the right property

Fear is usually the culprit of analysis paralysis and the inability to act. The sad part is when you suddenly make the realisation when you’re already 65 years old, and hadn’t done anything for your retirement, except for increasing a negligible amount in superannuation. This usually happens because for many people doing something is far scarier than not doing anything.

6.  Too late in realising that you underestimating the cost of a property

The cost of property includes rates, insurance, agent fees, maintenance allowance, water, and more. Make sure to hire the services of a quantity surveyor to create a depreciation schedule so you know the tax deductions that you are eligible to claim.

7.  Taking advice from backyard experts like family and friends

Family and friends usually don’t have the knowledge and experience to offer you helpful information. Don’t listen to opinions and hearsay; search for facts and figures.

These people are not out to destroy you; they probably just want to feel important by providing you with an opinion. Seek the advice of a person with experience, someone who owns several properties, as they have enough experience to give advice.

You can increase your chances of being more successful by knowing about these mistakes and doing something to avoid them.  In the end, the key is your borrowing capacity, creating a personalised strategy, and buying in an ideal location to conform to the strategy, your personal situation, and your objectives.  The most important is knowing that fear is the biggest obstacle to an investor’s success. Defeating fear is crucial. Fear shows itself in many varied ways, so understanding and tackling them head on should help you overcome.

One of the major contributors to a satisfying life is investing for your future and being financially secure in your retirement.