Common mistakes investors should avoid
Property investment can be a great way to set yourself up financially and has the possibility to reap many long-term financial benefits.
Traditionally when we see rents increase, we also see investor activity increase, which is why if you’ve been thinking about property investment, now might be the time to do so.
However, achieving success takes time and patience, so to ensure you don’t fall into the property trap here are some common mistakes to avoid.
1. Avoid an overheated market
Firstly, don’t buy in an overheated market. This simply means if you are reading about a boom in a certain suburb in the media, chances are it’s already too late to be buying in those suburbs. Instead take the time to identify areas that are likely to outperform in the long-term.
2. Look outside of your suburb
Secondly, don’t buy in the same suburb as your home. Too many investors buy a property that is close to the place they live. While your area may be a great spot to live, it may not be the best investment location. Take the emotion out of it and look far and wide for the best investment destinations.
3. Use a REIWA buyer's agent
If all of this seems daunting, don’t forget about hiring a REIWA buyer’s agent. They have years of expertise in the real estate industry and not only do hours of research but help guide you along your real estate journey and manage the whole buying and negotiating experience on your behalf.
4. Keep a buffer
Many investors fall into the trap of not saving up a sufficient cash buffer once they have acquired a property, therefore make sure to set aside a buffer to cover unexpected costs for each property in your portfolio.
5. Avoid cross-collateralisation
If possible, avoid cross-collateralisation as this can significantly reduce an investor’s ability to borrow in the future. Choosing the right loan strategy from the start can maximise an investor’s borrowing capacify and give them more flexibility moving forward. Seek advice from a mortgage broker or lending professional.
6. Engage a REIWA Property Manager
Finally, engage a professional when it comes to managing your property. Last year was a perfect example of how things can rapidly change, with emergency tenancy laws put in place that significantly impacted both landlords and tenants’ rights and a qualified REIWA property manager can manage your property and save you the headaches and allow you to enjoy the fruits of your investment.