5 Mistakes to Avoid for First-time Property Investors
Your first property investment can be a great first step on the path to wealth creation through building a substantial property portfolio – or a dead end that leads nowhere. Your first property investment is therefore a crucially important decision.
It’s said that around 50 per cent of all those who invest in Australian property sell up in the first five years, while less than 10 per cent of those who continue investing end up owning more than two investment properties. So it’s important to learn all you can and seek the best possible investment advice well before taking the leap into property investment.
Here are just some of the common mistakes made by first-time property investors you need to be wary of:
1. Choosing the wrong strategy
Investing in residential property should be seen as a high growth, relatively low yield investment, yet many first timers aim for cash flow. While cash flow is vital to keep you in the game, it’s the tax-free capital growth in the value of your properties that will allow you to retire in the manner to which you would like to become accustomed, ie comfortably wealthy.
2. Choosing the wrong property
You should aim to buy the right property in the best possible location. The property should have an element of scarcity and be located in a growth area. Pin-pointing this “magic” property can be time-consuming and difficult so it’s best to leave the decision in the hands of an expert property mentor at A-Team Property Group, who will have all the research at their fingertips.
3. Choosing the wrong financing
You don’t just need finance to buy a property, but also to buy yourself time to get through the down times in the property cycle by having a buffer such as a line of credit or an offset account. Get your finance wrong and you could be out of the game before you know it.
Successful property investors get their financing structure set up by an expert finance strategist well before they buy their first property.
4. Over-estimating rental yield and under-estimating holding costs
When looking to buy your first investment property it’s natural to ask the selling agent what the rental would be. Don’t blindly believe their answer as they could be over-estimating in order to clinch the sale. Double check with one or more local property managers before you go ahead with any purchase.
Many beginner property investors also fail to take account of holding costs such as property management fees, insurance, council rates, land tax and potential repairs and maintenance.
5. Making choices based on emotion
Never buy an investment property because you fall in love with it. You are not buying a home for yourself. With such a large financial decision you need to put emotions aside and make an entirely rational decision.
Avoid all of the above mistakes and you are off to a flying start in your property investment journey. The very best way to do this is to seek out experts who can safely guide you through the entire process and help you avoid all the traps and pitfalls.
Despite all the excitement, property investment can be hard work. There’s a lot of research and hoops to go through in order to see a healthy return on investment and avoid beginners’ mistakes. When you shop for a consultant you’ll want the best for your money. For most investors, that would be The A Team Property Group, a trusted leader in property consulting.
Make Smart Investments and Partner with A Team Property Group
The A Team Property Group is the premier choice in Australia for consulting on property investment decisions. You can rest easy and watch your profits climb without worrying about taking on the risk of plunging into the market yourself. Get the help you need to succeed and seek out the property investment experts at the A Team.
Are you ready to start investing in residential property in Australia? Consult with the dedicated team at A Team to ensure you’re making smart, safe and profitable investments. Get on the phone with The A Team Property Group and start succeeding today!