Common property investment mistakes to avoid
Every investment strategy – including property investment – carries with it a degree of risk and unfortunately, most forms of investment also have their fair share of horror stories.
Some of the common investment mistakes are often easy to avoid, provided you have done your research and understand what you are getting yourself into.
To help you maximise your returns and build that property portfolio sooner, we highlight some common investor traps that you need to avoid.
Failing to prepare is preparing to fail
Property investment is a long-term commitment and one that should not be entered into lightly.
Too frequently, investors find themselves in trouble because they have failed to do their homework.
While it might seem obvious, the best way to get off on the right track is to gather as much data and do as much research as possible.
There are literally hundreds of research products now available and finding them is only as hard as visiting your local newsagent.
Moreover, don’t forget to assess your own financial situation and calculate how much you can afford to spend on your property – check your borrowing power here.
What’s hot and what’s not
Finding out where and when to invest your money can be a daunting task, even for the most seasoned property investor. Thankfully, there are experts out there who can help.
However, a common trap many investors fall for is property ‘experts’ spruiking the next big investment hotspot.
While it is always smart to seek out professional advice prior to investing, be sure your investment network is made up of trustworthy and reputable experts.
Don’t be afraid to ask for references, appraisals and previous testimonials, because at the end of the day you will be the one paying the bill.
Capital gain vs cash flow
Knowing what you want to get out of your investment is important but beware, there are dangers associated with being too specific.
Many investors do not realise that they can often achieve both capital gains and positive cash flow through their investments.
In the case of larger property portfolios, it can pay to have a stable combination of positive cash flow investments and properties that yield strong capital gains.
But for those looking to secure their first investment, the long-term rentability should be the prime concern.
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This article via Which Investment Property does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.