Does property investing revolve around buying property or selling property?
Sometimes a problem can feel too great to overcome which threaten to hold-up or kill a deal. As property investors, $10,000 as a property investment maybe a small mistake in context to total costs involved in buying or selling property with a price-tag of $500K plus.
There’s a way to avoid losing money in your property investing transactions and key is to educate yourself first.
Real estate is by no means risk-free property investing, because so many people ignore basics which ends up being a problem.
Want to avoid the most costly and devastating pitfalls property investors would want to avoid at all costs:
Only fools rush in: A buy-at-all-costs mindset is one of the biggest mistakes a property investor can make.
Not only does it allow emotion to have a free rein, a buyer could be counting the costs for years to come by paying too much.
Property investment should be a calculated decision that combines extensive research, quality advice and a proven product in a popular area where demand exceeds supply.
Not being informed because information is power: 2008 Australian Securities and Investment Corporation report about investors found that only 7% of investors surveyed could correctly state the official interest rate. And that’s only the beginning.
Half of the investors surveyed use media (internet, magazines, newspapers, TV and radio) to identify opportunities. Just 36% of investors follow this up by consulting a professional.
At its simplest, property investment is purely about numbers, not about a cool address for holidays. Yet correct advice is paramount to ensuring numbers work now and long term.
Going it alone: Leading the top three recommendations made by experienced investors in the ASIC report was the advice to deal with reputable, well-known companies (18%).
An equivalent percentage of investors recommended that you do lots of research, and 17% warned that you check what you are investing in.
Interestingly, only 47% of investors had a long-term financial goal or plan, and almost half had only one type of investment. Most felt they were not serious property investors and were saving for their future and/or retirement.
Be guided by experience and a proven formula for results and you can be the winner.
Delaying your decision: There’s no such thing as a good or bad time to buy an investment property, and especially when you’re young.
It should be clear once you have studied the fundamentals and conducted due diligence that it’s only a matter of the figures adding up for you, with a contingency fund factored into the equation.
Not relying o capital growth, the results can be immediate as the average Australian can save between $8000 and $10,0000 on tax every year.
Buying in the wrong areas: The holiday home syndrome is perhaps the most common lapse in judgement.
It’s easy to get carried away with the good life when you’re far from the 9 to 5 lifestyle, but a quick analysis of the usually volatile rise and falls of the local market can soon turn your notion of paradise into a sobering reality.
The Gold Coast property market is a prime example…
Riding high in 2008, the collapse of the global economy has resulted in apartment prices falling up to 40%, with the market only now emerging cautiously from the pain. Look for consistency in price growth, growth prospects and demand.
Likewise, cashing in on a boom area is also likely to end in less-than-favourable results. Unless the reason for the boom, such as a mining project, is deemed to be generational, any short-term gains are sure to be followed by long-term market stagnation.
Borrowing too much only a small fraction of property investors can afford to spend more than $500,000 on an investment, which is why it is recommended to start small.
A recommended option is buying a new house between $300,000 and $450,000 in an area where demand outstrips supply.
What’s the risk of being lumbered with other people’s problems in established homes?
Off-the-plan come with the bonus of stamp duty savings, depreciation benefits and the peace of mind of builder’s warranties.
The biggest bonus is these properties can be positively geared from a loan perspective, allowing the investor a strategy of requiring little or no ongoing payments.
Again, consult a financial adviser and set up a brighter future. Just remember, from little things, big things grow.
No strategic plan: The ASIC report found 65% of investors aged 18-24, 48% of those aged 25-34 and 45% of young couples were unlikely to have a financial plan or long-term goal.
It found the most common triggers to make an investment decision were divorce, inheritance, redundancy and retirement.
Being pro-active can only enhance your long-term prospects.
Creating certainty by meeting a financial planner and putting in place an achievable plan can bring structure to your life.
Being prepared for a pension-free future means you start focusing on the joys of living instead of what you’re missing out on.
Get rich quick: Property is a proven method of providing a sustainable future. But like any investment, the higher the return offered, the higher the risk.
Property is a long-term investment strategy that should be employed for at least 10 years. Anything shorter and it’s unlikely to work as well as it should. The proof is in the pudding.
Since 1900 there has only been 13 years of negative growth in Australian property. This includes the Great Depression, World War I and II, the 1990s “recession we had to have”, and the Global Financial Crisis.
If You’re a New or Savvy Property Investor In Need Of Fresh Ideas and Proven Strategies…This Is For You!
Everyone talks about investing, where to invest, where not to invest, the Warren Buffet secrets to invest, etc. Not everyone talks about under-investing and that can hold you and your investing back even more than bad or risky investments.
Let me be the one to shine light on this phenomenon. Why wouldn’t you get guidance from a proactive property investor who has walked in your footsteps?
The short answer is talk to a property mentor with industry specific skills and experience.
You want to always make sure you get at least 95% probability or greater results because you get more focused and get better results.
Start with a property mentor who helps you handle advanced areas of your investing and your profits breakthrough to the next level at a speed you never thought possible…