While some investors invest to make it big in the market, others invest for passive income or to secure their retirement, but no matter what the reason to invest is, there are some common mistakes every property investor makes in the beginning.
Our property markets have been booming recently, but this will give a false sense of security to some beginning investors and they should be careful as we move into the next phase of our property cycle.
Without further ado, let’s dive into what these mistakes are so you can avoid them if you’re a beginner property investor.
- Emotion Over Logic –
When it comes to investing, letting your emotions rule your buying decision is a common trap to be avoided at all costs. Don’t allow your emotions to cloud your judgement, make sure to take investment decisions based on analytical research. Some questions you can begin with are ‘What are the local demographics like?’, ‘Will the investment give you the capital gains and returns you expect?’, ‘Is it the best location to attract quality tenants?’ and so on. Remember, buying a property is not like buying a bag of groceries, you might be putting in a lot of your savings and effort, so make sure to be well informed and have answers to all your questions!
- Fail to Plan, Plan to Fail –
Why does an investor invest in property? For two main reasons, one is to build a lucrative property portfolio and the other is to have financial freedom down the line. And what does this lead to? Haste! Many times, investors forget that attaining wealth doesn’t happen overnight, it’s the result of a well executed plan. Successful wealth creation through real estate takes time, requires you to set goals, determine where you want to end up, and then devising as well as adhering to a meticulous plan.
- Over Impulse or Over Caution –
Two of the most common traits of budding real estate investors who never make it beyond their first property are either acting too impulsively or being overly cautious and never acting at all. There’s still hope for the impulsive ones, because they can sometimes learn from their mistakes and make a success of their investment endeavours, but the cautious ones never overcome their fears. The best thing to do is to find a happy medium – learn as much as possible and as we mentioned above, do lots of research!
- Shortcuts and Impatience –
Let us spell it out for you, property investors. You will not become a millionaire overnight! There, we said it. Many investors think that property is a quick fix to their financial problems, but the truth is far from it. Shortcuts and impatience will lead you nowhere as a property investor. It takes time to sell real estate and then there are the numerous costs involved, including capital gains tax. A word of advice from us is that if you approach property investment with patience and persistence, you will gain far more success and wealth!
- No Research and No Consultants –
One of the biggest mistakes we’ve seen property investors make is investing after attending a few seminars and reading a few books. Understanding property takes time, and often expertise. And if you lead a busy life juggling work and family, it’s okay to consult with a property strategist to understand the nitty gritties of the property you want to invest in rather than burning yourself out doing research after hours. Every consultancy firm has a team of expert researchers and can provide you with useful insights about property investment.
- Investing in the Wrong Property –
Don’t think we’ve seen investors make a more common mistake than this! And not surprisingly, this is the biggest blunder when it comes to property investment. How can one invest in the wrong property yet expect the right results? Property investment is a lot like Newton’s law ’For every action, there is an equal and opposite reaction.’ The most important factor to consider while investing in the ‘right property’ is the location and neighbourhood of the property. Given that this further needs to be supported by multiple other factors, but if the first step is wrong, all the others that follow cannot be right.
- Poor Management of Cash Flow –
Easiest trap for a new property investor to fall into is poor cash flow management! Understanding all of the costs involved in acquiring and holding property can be difficult and again, it is key to reach out to a property consultant and accountant who knows about real estate investment to ensure you know exactly what you’re getting into financially. There are multiple costs that investors often forget to consider while looking to invest in a property, like extended vacancy periods or unexpected maintenance costs.
As we’ve mentioned several times before, seeking the advice of a property consultant is key to investing in the right property, especially as a new property investor. While reading about the above mistakes can definitely be insightful, nothing compares to a professional’s advice. So if you’re a new property investor, get in touch with us at at 02-81230180 or drop us an email at email@example.com
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