Investing in property is one of the most surefire ways to make money off property, and in Australia, many people invest in property as a means to diversifying their investment portfolio. There’s no shortage of information available for investors who are looking for facts and figures, but what about how to avoid potential problems? Let’s take a look at some of the biggest investment property mistakes to avoid.
Mistake One - Buying with your heart instead of your head
As an novice/expirenced investor, you need to ensure that you are buying your property with your head instead of your heart. What this means is that when you go to purchase something, you don’t think about the property as if you were going to live in it - instead you need to think about it from a renters perspective. Will the property appreciate in value? Will it be rentable? Will it attract a quality tenant for the property?
Mistake Two - You don’t get a proper building and pest inspection
When you’re buying a new house, you need to ensure that you get a proper building and pest inspection. if you don’t get this, you run the risk of purchasing a property that has termites, pests or problems with the structure of the house. A good friend of mine recently went to buy a new house and had to pull out at the last minute due to a poor report from a pest inspection. They’re worth their weight in gold, because you might just wind up with a dud if you don’t get the inspection done. A great and trustworthy company like Dawson's Australia will be able to help you with your property inspection.
Mistake Three - You miss hidden costs
When buying a property, there are a host of costs associated with the purchase like stamp duty, insurance and tax. You need to factor these costs into the purchase of your property, otherwise you might end up with a higher cost than you originally anticipated. Doing your research requires a lot of vigilance, so be sure that you figure out what is the best possible way not to miss anything.
Mistake Four - You don’t plan your finances properly
Organising the finances for your property purchase takes a lot of skill and you need to be sure that you’ve sorted out your mortgage and insurance way ahead of time, so that nothing holds you back from the property going unconditional.
Mistake Five - You either do all or nothing
Investing in property requires action - but not too much and you risk losing out. Not too little, either, otherwise you risk stagnating. Strike the right balance between action and caution.
Mistake Six - You don’t have other liquid investments
Purchasing a property is a solid investment, but it helps when you’re buying if you have other, more liquid investments to back this up. What I mean by this is that you need to have some cash accessible, and not all of it tied up in house assets.
Mistake Seven - You don’t do your homework
Buying a property requires a lot of research. As part of the research, you need to check and double check all of the possible variables that can go wrong, and possible things that you need to consider. You must look at the cost of the house, the cost of your mortgage, the interest rates, the insurance, the rates and the occupancy rates for the area that you’re looking at buying in. Once you have looked at these things, check them again! This will ensure that you don’t miss anything.
Good luck with your property investment journey and be sure to take advantage of free online mortgage calculators.