Tag Archives: property investing

Property Investing – How To Avoid Devastating Costly Mistakes

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…

Property Investing

Buying Investment Property And The Property Cliches

Many Australians are buying investment property armed with nothing more than poorly understood property cliches, are these aphorisms always true?

Is property investing your business or passion? I personally love seeing property investors make bank. Seeing property investors make ill-informed property decisions and costly mistakes can be avoided with greater knowledge and understanding of property cliches.

Regardless of your property investing experience and the type of property you’re now researching or planning, here are some real estate and hard-won investing lessons I’d to share with you…

So what are property cliches? Are you aware of property cliches and why you’d want to ignore them in your property research, planning and transactions?

Over the years residential property has proven to be one of Australia’s best performing investments. Buying property is considered the biggest investment decision…a cliche?

Surprisingly, many Australians buy property with little or no investigation into the factors which drive individual property performance.

Misinformation is prolific and the cause of many poor investment decisions. Even well trusted beliefs can prove misleading for the most experienced property investors.

What if you questioned the validity of property clichés and commonly held assumptions? Would it mean as buyers you’d make better informed decisions? What are the investing factors which differentiate a good investment property from a poor one?

property cliches
Are you buying investment property armed with nothing more than poorly understood property cliches…

Location, location, location, possibly the most well-known property cliche, often quoted as the quintessential factor when it comes to property selection.

What many buyers fail to realise is location is about far more than just the right suburb or even the right street; it is as specific as the lot number or position in a block of units.

Neighbouring properties may appear to be similar in many ways, factors such as aspect, orientation, floor plan, levels of natural light and security, all have an important impact on property value beyond the underlying land value.

Hot spots, it’s not uncommon for property investors and buyers to chase the next big hot spot with hopes of making a quick buck. Hot spots aren’t all they’re cracked up to be right?

By definition a hot spot is a suburb or area predicted to benefit from rapid short-term gains in value. However, despite an initial spike, a hot spot is usually characterised by slow or limited growth in the long-term that often eventually undermines short-term gain.

Because of the high transactional costs of buying property investments,  real estate should be viewed as a long-term plan, which means hot spots often fail to provide the exceptional growth buyers hope for…

Timing and analysis of historical sales data clearly shows that it isn’t when you’re buying investment property, so what you buy is that an important factor?

Purchasing a property based on price alone is no guarantee of future capital growth or performance. Selecting the right property with the right profile for growth ensures property owners buy an asset which performs irrespective of wider market conditions.

Keeping up with the Jones, some of the best performing properties aren’t glamorous. When buying investment property don’t be fooled into thinking the more you spend the greater the likelihood of good capital growth.

In fact, buying a flashy new property or one considerably above a suburb’s median price can limit buyer demand and subsequently growth.

When investing, don’t buy property which appeals to buyers’ aspirations. Buy property which caters to financial and social requirements of tenants and buyers in the area.

Sitting on the sidelines, during uncertain economic times it’s common for buyers to withdraw from the marketplace in anticipation of property prices reaching the bottom.

Adopting a wait and see attitude to buying and selling real estate can be disadvantageous.

The reduced competition during a downturn can create really good opportunities for savvy property investment buyers. History shows most buyers tend to return to the market after a positive shift in sentiment and later on as the values have already occurred.

Property investors which have bought well needn’t worry about selling in a downturn either as quality real estate assets are always in high demand.

So don’t wait for others to make the first move. Base your decision to buy on your personal financial circumstances, not market sentiment.

Buy the worst house on the best street, can seem like a cost effective way of buying investment property in a sought after location, however, it is not without risk…

property renovation cliche
Property renovation cliche…

The goal is commonly to transform property from worst to one of the best properties on the street. However, any saving on initial purchase is often very quickly absorbed by renovations to improve the property.

Conversely, deciding to leave the property in its original purchase conditions can have negative implications for the property, which will be reflected in future capital growth.

It may actually be more cost-effective to buy a better property and forgo the expense, stress and risk of renovating.

Think outside the box, when it comes to investing in property there is no need to reinvent the wheel.

Investment properties which offer ROI aren’t always architecturally unique or modern. In fact, they are more commonly well-located inner city period and pre-1970s properties.

Property selection isn’t a guessing game, so stick with tried and tested property selection methodologies that rely on empirical sales evidence, not speculated or high-risk returns.

A renovators dream, as renovation property programs continue to hit Australian television screens the punter or DIY handyman considers the prospect of buying and renovating to make a quick buck.

The novice renovators often underestimates the commitment required to transform a property, which can cost them significantly.

value investing
Novice renovators surprised by value investing…

When deciding to renovate it is important to consider where the property is located, the type of property e.g house or apartment, whether it will be a rented investment property or owner-occupied…

Who is the target market, potential buyer or tenant of the property? Sellers should renovate to their target market…

It is also important to be wary of overcapitalising in a property, as the amount spent on renovations may not offer an equivalent return in the increased value of the property.

A good rule of thumb is to not spend more than 20 per cent of the property’s value on renovations.

Up and coming, closely related to hot spots concept, which is often used for suburbs expected to perform well on the basis of proposed future improvements to infrastructure and/or local amenities such as roads, school, shopping complexes, sporting facilities etc.

When it comes to property, one of the golden rules is never speculate. Purchasing on the basis of planned or proposed future improvements is risky.

Hundreds, if not more, development proposals are put on hold or denied every year and when approved can take many years to build. There’s no guarantee the added amenity will add positive weight to local property prices.

The most diligent measurement for an asset’s future growth is to look at its performance history. Remember to consider this when looking at hot spot or up and coming suburb.

If you feel that you are ready to step up to the next level, stop trying to figure it all out on your own and make sure you don’t go around the calender another year without seeing success...click here now!

We might be able to help by mentoring you and giving you a step-by-step system to follow and help you get to the next level.

Property Cliches