Although property investment is one the popular field that can make people rich over time, but there is always a learning curve to property investing. Every new property investors frequently have to work a lot of trial and error until they get on the right path of this field.
Top 6 Mistakes That New Property Investors Frequently Make Share on XBesides, understanding some of the pitfalls can actually help you to watch out for along the way and make you easier and minimal the numbers of mistakes that you shouldn’t be made.
Here are the 6 mistakes that new property investors frequently make;
➊ Doing Solo
Started your property investment journey is like you started a business, its require a team. You need to know that a good team is your biggest asset as a property investor. A good team made up of a conveyancing lawyers, property agent, a handful of trusted home inspector and at least one mentor is essential. You have to work with each other very well, so that you can approach to the goals that you have set earlier.
➋ Failed to Planning
This is the biggest mistakes that almost all the new property investors will make. Not having a plan can be very serious in final resulting. Never buying a piece of property because it’s simply a good deal. You have to check deeply about the property that you’re going to buy. The most importantly, create an investment strategy that your financial can afford to before even started your property investment journey.
➌ Bad Financing
If you having a not sufficient savings, it is advisable to not to start your property investment journey until your savings can paid at least 50% of the property (which include 20% of deposit of the property, legal fees, stamp duty and other costs during property purchase). While, a bad financing can cause a property investor to lose money, or even worst case scenarios that go completely out of business. The bad financing can include a combination of the following;
a) High monthly loan repayment
b) Adjustable interest rate
c) High interest rate
➍ Get the wrong mindset of “get rich quick”
This is another biggest mistakes that made by new property investors. You might heard it from the so called “property gurus” in the seminars. But believe me, there is no such thing in property investment field. Although there is no denying that you can definitely make a fortune as a property investor, but don’t be naive and silly enough to believe it will happen overnight.
➎ No do your own research/ due diligence
Although there is a property agent helping you to search for the right property, but do your own research is essential. Every time your buying an investment property, performing due diligence needs to be a top priority. Do the deeply research of the property that you’re plan to buy, to see whether its ready-rent property, future development, location, vicinity and so on. (Click the link to read how to choose a right location for your first investment property)
➏ Underestimating upfront costs
Like we said earlier, your savings have to be at least a 50% of the property purchase price, and preferably there will have leftover savings after buying a property. Why we said at least a 50% of the property purchase price is needed? Before buying a house, get a pre-approval letter on loan from the bank officer to see what is the maximum amount that you are able to borrow. By doing so, you will get to know whether you should pay a 10% or 20% of deposit of property selling price. Additionally, you have to consider other upfront costs such as stamp duty, legal fees, documentation costs, repair costs, agent fees and so on.
In order not to becoming house poor, it is advisable to make a list of all of the monthly costs that are related with running and maintaining a property before actually buying a property. Once those numbers are added up, you will have a better idea of whether you can really afford a property.
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