Real estate might be booming, but getting the right deals requires expertise, patience, and effort. You can’t expect to be an expert overnight, and you are bound to make many mistakes on the way. To prevent your hard-earned money from falling into the wrong hands, it is important to know the common mistakes property investors make and how to avoid them.

Ensure that you are following the right information and have adequate professional support available to help you when things get messy, which they will.

Property investment can quickly get overwhelming, and if you don’t understand the process, you will never be able to make well-informed decisions. Thus, let’s look closely at the biggest mistakes property investors make and try to steer clear of them.

Among the many common mistakes beginner investors make, not having a solid investment strategy sits at the top. Beginner investors are always looking for a quick and easy way to buy into the hype of property investment without considering the risks and costs involved. Moreover, they are unaware of what they want from property investment.

By identifying the key focus and goals of buying and selling properties, you can figure out your end goals, such as increasing pensive income, retirement funding, increasing net worth, etc., and search for properties accordingly.

Thus, as you can see, property investment is a long game, and you can’t just rush it. To make a property investing strategy, you first need to have all your financing figured out. For instance, do you have the capital to invest in a high-cost property? Or can you only afford fractional property ownership? How much can you borrow? These are all factors you need to consider before diving into this industry.

Investing strategies depend on the individual; thus, it’s better to plan first, create goals, and develop a strategy accordingly.

Suppose you walk into an open home, you love the feel and aesthetic of the place, you are getting a good vibe, the house is close to your home, and it seems the area is popular too; what would you do? Buy the house? No! The most common mistake investors make is that they let their emotions drive their decisions, and although it isn’t wrong to look for a property that gives you good vibes, this should not be the deciding factor for you.

For investors, it’s all about numbers. When buying properties, you need to look at the value, location, and nearby amenities to determine if the house is worth it. You have to think from a tenant’s point of view rather than what’s convenient for you. Treat your property investment like a business and research online on realestate.com.au and domain.com.au to view the median prices, the value growth, etc.

It’s also recommended to bring a property manager on board and make objective decisions like raising rent, not renting to family members, etc.

Many property investors believe that the real estate market can only move in one direction, up. Well, they are wrong. No matter how successful and safe the industry may seem, every opportunity comes with risks. If you are not considering them in your investment and financing strategy, you are making the same mistakes a lot of investors make.

Aside from unpredictability, many other risks are involved, such as choosing the wrong location, high vacancy rates, hidden structural problems, bad tenants, overexposes in one area, etc. Lack of liquidity is also a major risk for property investors. You can end up selling below value just to unload a property rather than thinking of taking a commercial equity loan.

Risk limits how much you are willing to expose yourself for a good return, and it can be easily managed through careful research and analysis. Thus, do your due diligence and be prepared for many highs and lows when it comes to property investment.

Not doing the right amount of research is among the many mistakes property investors make, and they have no one to blame but themselves. Skimping on research is the major reason many property investment ventures fail because people are unaware of the current housing market and consumer demand.

Research can be a bit tedious, but it’s important if you want your money to make money. Thus, before buying properties, there are many things you need to consider, such as property value trends, vacancy rates, average rental yields, location, condition of the house, and the nearby amenities. To simplify the research process, we have broken it down into simple questions you need to ask yourself when buying properties to avoid common mistakes investors make.

•    Why is the house being sold?
•    Is the house old or new?
•    If the house is new, do you have the capital investment?
•    Do you have the capital for repairs and renovations if the house is old?
•    What are the city’s plans for the area and neighbouring areas?
•    Are there adequate schools, grocery stores, and medical facilities nearby?
•    Does the area deal with floods, termite problems, etc.?
•    What are the repairs and appliances required?

Another important tip for first-time property investors is having a solid financing plan. Before you rush to buy your first property, there are many things you need to consider. For instance, what’s your capital? Can you buy high-cost properties and enjoy an increased return, or are you settling for older properties and increasing value through renovations?

Moreover, how much are you willing to risk before you begin, and can you keep up with the everyday costs? Buying a property is not a one-time expense; you must consider the mortgage, loan repayments, and utilities. Thus, you need to have adequate backup financing plans in place in case you lose your job or interest rates rise.

You also need to choose between fixed-rate mortgages or interest-only loans. Interest-only loans might seem enticing but can be troublesome when interests rise. Thus, for a first-time investor, it is recommended to pay in cash and opt for a fixed-rate mortgage.

Don’t waste your hard-earned money by letting your heart make a choice rather than your head. Be very strategic about buying properties, and don’t make the same common mistakes beginner investors make. When first-time investors see a property they like, they become anxious and want the seller to accept their bid fast, so they overbid.

This is directly correlated to a lack of research. When you are unaware of the current market and housing trends, you tend to overpay and increase debt, which obviously takes years to pay off. Thus, before bidding, it is important to research the area, see the value of similar properties, or talk to a property manager before making any decisions.

Depreciation is another thing first-time investors don’t consider or are unaware of. It is an important tool for rental property owners. It enables you to deduct costs from your taxes of buying and improving a property over its useful lifetime as soon as it is available for lease. Since it is a non-cash deduction, it is usually missed. Remember that the tax agency has very specific rules regarding which properties are depreciable, for instance:

•    The property must be used for generating income.
•    You are the owner.
•    The property is going to last more than a year.
•    The property has a determinable useful life.

Depreciation can turn your negative cash flow positive; thus, doing your due diligence and studying up is recommended.

Among the biggest investor mistakes, underestimating expenses is a common one. First-time investors think that saving up for the down payment is the only upfront expense they need to worry about. Oh, how wrong they are. A house is a huge investment and requires adequate upkeep and maintenance to retain its value.

Some common expenses include utilities, structural changes and maintenance, mortgage, loan repayments, insurance, property taxes, repairs and renovations, legal fees, and much more.

It is recommended that investors make a list of all possible monthly expenses before making a bid because their profits are directly tied to the amount of time required to buy, improve, and resell the house.

As mentioned above, every industry has its ups and downs; the same goes for real estate. The game might seem riskier for investors, but it comes with the territory, and all you have to do is stay vigilant. Things might seem bad today, but they won’t remain the same, especially in property investment. Property values have shown to double every 7 to 10 years, so don’t give in to the fear and sell below value.

You can’t expect to do everything on your own. It is recommended to take professional help when necessary to maximise your profit, minimise your taxes and risks, and help your property investment venture take off. For instance, your property manager can manage your property, handle the tenants, and take care of evictions. Similarly, you can reach out to your local real estate agent like #1 Property Centre to help determine the property’s value, the value of neighbouring areas, etc.

And that’s it! Now that you know the common mistakes property investors make, you can ensure to steer clear away from them and make your property investment venture a success. Reach out to #1 Property centre; they have vast experience buying, selling, and renting properties and ensuring you get the best deal possible. We hope this article helped!