NewsGuides10 Common Mistakes Property Investors Make (And How to Avoid Them)

10 Common Mistakes Property Investors Make (And How to Avoid Them)

10 Common Mistakes Property Investors Make (And How to Avoid Them)
Joel RobinsonJun 17, 20194 min read
Investing in property can be a great step towards gaining financial freedom - providing a steady source of rental income and a neat little profit when you eventually decide to sell! While it may sound all too easy, what many new investors don’t know, or choose to overlook, is that buying and managing a property requires skill, time and experience. So if you’re thinking about taking that initial step, it’s important to keep in mind the classic mistakes many property investors commonly make. With this in mind, check out our list below, and learn some smart property investment tips...

Mistake #1: Not having a plan No successful investor ever made good money without a plan! Smart property investment requires you to think about your long-term goals and your current financial position. Map out your intentions and put in place - with assistance! - a clear, thorough strategy that will keep you on track and ensure success.Mistake #2: Failing to consider EVERY cost Be sure to keep track of the real cost of your investment by asking the following questions:
  • What’s the current state of the property market?
  • What type of rental properties are always in high demand?
  • What is the average rate of occupancy?
  • What condition is the property in?
  • Will you need to renovate the property before it can be rented out?
Mistake #3: I can do it all myself! When it comes to purchasing an investment property, it’s your responsibility to become ‘financially fluent’. By this, we mean read up on property investment generally, consider different finance brokers, accountants and solicitors and weigh up which of these professionals have the best experience and are going to be the most understanding of your needs. If you want to be successful, then don’t underestimate the value of professional help and advice.Mistake #4: Skipping on research It’s easy to forget what really matters when you’re out looking at properties. Remember that buying a property close to where you live, where you holiday, or just because you really like it doesn’t necessarily equate to smart property investment. Keep your goals in mind, do the groundwork and investigate locations, populations and demand. Be thorough and rigorous in your research, there’s a lot of money at stake!

Mistake #5: Losing sight of the big picture Given that property is a long-term investment, it’s easy to fall into the trap of failing to regularly review your property portfolio. It’s important to consistently check that your rental income is appropriate considering the current market and the property location. Consider as well if you’re on your way to achieving your long-term goals and ask whether your property is benefiting from strong capital growth.Mistake #6: I’m going to be rich straightaway Don’t get caught up in the hype of ‘get rich quick’ schemes. Remember that smart property investment is all about time and patience. It can take a while to build up a sufficiently large asset base, but it’s well worth the wait!Mistake # 7: Bargain-hunting A cheap property isn’t always a bargain. Set yourself up for success by buying the right property in the right location.Mistake # 8: Underestimating renovations Renovations can be a great way to add long-term value to a property, but they can also drain you dry if you’re not prepared for the expense. However, if you’re willing to hold onto a property and reap the rewards in the future then renovating is definitely worthwhile. It goes without saying that purchasing a property, undertaking minimal work and then trying to turn a profit isn’t a recipe for success when you consider stamp duty, buying and selling costs and taxes.

Mistake # 9: Overlooking the risks Any large financial investment entails a certain amount of risk so it’s important to have sufficient funds in place to cover negative gearing and any potential downtimes. Smart property investors legally minimise their tax and protect their properties by buying correct ownership structures, often controlling their assets through companies or trusts.Mistake # 10: Overborrowing It’s not uncommon for investors to get overconfident when they’ve successfully secured several properties and have encountered minimal difficulties throughout the process. It’s crucial to remember that refinancing can become impossible when you’ve already borrowed to your limit. Keep your long-term mindset in place!Need help getting started? iBuyNew will point you in the right direction! Whether you are looking for apartments, townhouses or house and land packages, working closely with an iBuyNew property consultant, who understands the market, will help you find something suitable that’s tailored to your needs and requirements. Get in touch with them on 1300 123 463.
Joel Robinson

Joel Robinson

Joel Robinson is the Editor in Chief at iBuildNew, where he leads the editorial team and oversees the country's most comprehensive news coverage dedicated to the new home building industry. With more than a decade of experience in residential real estate journalism, Joel brings deep insight into Australia's evolving home building and construction landscape.

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