5 Common Mistakes Property Investors Make
If you're a property investor or looking to enter into the property investment space, there are a lot of mistakes that you should avoid making. In this blog we are going to share with you some of the common mistakes we have seen people make in the real estate investing space. We will also provide you with some tips to avoid them. That way, you can successfully build a property portfolio that aligns with your investment goals and provide you with a healthy passive income.
Below, we have compiled our five biggest mistakes that we've seen investors make in real estate investing. At REIF we like to set our client's up for success and ensure that we can provide them with the best investment strategy.
Mistake Number 1 - When Investors Don't Have A Plan
Yes, it's true. When entering the property investment space, some investors don't actually have a plan. It's so important to account for your living costs and the the kind of lifestyle that you want to create for yourself from your property investment. When investing in real estate, investors should be able to understand the bigger picture and what it will mean for them in years to come.
To avoid this common mistake, develop your long term plans and goals before making the commitment. Determine what these goals will mean from short and long term perspectives. Set realistic targets and constantly review your plan to see how you're tracking on your journey.
Mistake Number 2 - When There Is No Finance Structure
Having the right finance structure in place is just as important as finding the right investment property. It's crucial to understand and track your finance expenses and repayments that will contribute to the ownership of your investment property. As an investor you need to ensure that you are constantly reviewing and sourcing out the best interest rates.
To avoid financial hardship from owning an investment property, we recommend working alongside a mortgage broker. They will ensure that the best structure is in place for you. They will also structure your finances in accordance with your plan and goals. At REIF, we have a national team of qualified mortgage brokers who work to structure the finance of investment properties daily.
Mistake Number 3 - When Investors Buy On Emotions
As humans, it's easy to let emotions get the best of us. This is especially true when we make big commitments such as real estate investing. New investors generally base their decisions on their emotions. Though, it's important to replace emotions with number and logic based decisions.
You can overcome emotional based investing by researching the type of property you want to purchase and the location demographics. It's also important to engage yourself with a specialised property investment team who will help you to understand the logic and numbers behind your investment goals.
Mistake Number 4 - When Investors Don't Have A Buffer Or War Chest
In a previous blog we explained the importance of having a war chest in place from a lifestyle and personal finance perspective. A war chest is a financial reserve that is put in place to ensure you're able to cover yourself for unexpected costs when money is tight. To read more on war chests, check out this link. Essentially, as an investor you should have one of these in place in times of emergencies when expenses towards your property can't be made.
We usually recommend saving a proportion of your salary each week into a separate financial reserve fund. This can be simplified by asking your bank to set up automatic deductions from your pay into this separate account. It's important to build up at least six months worth of income to be able to support your investment property(ies) and your lifestyle.
Mistake Number 5 - When You Don't Have The Right Team Behind You
When becoming a property investor, it's so, so, so important to have a specialised team behind you. We CANNOT stress this enough! What sets us apart from a lot of property investment companies is that we have specialists in all the fields required to support your investment strategy from the beginning to end. Our team is made up of research and property specialists, mortgage brokers, accountants, and legal experts.
Are you wanting to invest in property? Avoid the listed mistakes and get in contact with our national team of specialists. We will be able to point you in the right direction and set you up for financial success.
Ph. 1300 130 932