Property is one of the most promising investments in Australia. But the practice is not a simple buy-and-sell. While offering a big return, this kind of investment is also posing a big risk. A wise strategy is required. Otherwise, you will make at least one of these 10 most common mistakes made by property investors in Australia.
1. Trusting Personal Preference Too Much
People tend to buy the things they like. For personal use, the aforementioned decision is acceptable. But buying a property for investment is hugely different than that.
In this business, your personal preference would not matter. You need to use logic most of the time while considering the purchase of a property. Even some great investors would buy a property they dislike if it seems like a valuable thing to invest in.
2. Not Getting Enough Information
Of course, every people would always get information first before deciding to buy a property. Even salesmen are more than happy to explain the item they market. But, agents mostly talk about the beneficial features of the properties they sell.
You need to know a lot more. Find out what are the disadvantages and challenges you might encounter in the future. Check also some other more properties as alternatives to compare.
3. Forgetting the Long-Term Consideration
Investing in property means you purchase it now to sell again later. By later, it means like a few years from now. No one can predict the future, but that should not stop any good investors. They will instead do their best to analyze the possibility.
Many investors make decisions only by the current situation. A few years later, they find their property’s price drop due to circumstances they should have predicted a long time ago. Therefore, remember to always think ahead. Find out whatever may happen in the future and how will it affect your assets.
4. Impatient
Many investors are overly enthusiastic about gaining money pretty quickly. Such a mindset will only stress you out and obstruct your way to success. Because property investment is not an instant source of money.
The “big money” of property investment comes from capital gain, which will be most optimum in years. Also, selling a property takes more time than buying one. If you need something that can be cashed out easily, you might consider investing in something more liquid.
5. Not Evaluating Portfolio
Some things may happen beyond expectations. That is a regular evaluation is required even if you have carefully analyzed the possibilities. You need to review your portfolio at least once a year. This helps you to re-adjust your strategy.
Many things need to be evaluated. Is the area still popular? Are the buildings still appealing to today’s society? For example, a house that is too dependent on the artificial HVAC system would be less impressive since climate-changing awareness is rising.
6. Impulsive
Ads can be very convincing. Some people can get too hyped from it. Such a classic trap, yet many people keep on falling into it. The same impulsivity can also happen in resell practice. Many people let go of their assets at low prices just because they hear bad rumours that might affect the property’s value.
Being responsive is a necessary trait in investment. But never let your emotions take a toll on you. Quick action might be beneficial, as long as you are being considerate.
7. Too Cautious
Being impulsive is bad. So is being too cautious. While you are settling in your doubt, the market remains on the run. You may see the prices are sky-rocketing as you are busy considering. By the time you are sure about it, the item might have been too expensive.
Many investors fail the principle of “buying low, selling high” because they lost the momentum for thinking too much. Some of them are even too cautious that they end up not investing at all. Being careful is a must. But above all, you must know when to buy and when to sell. This gives you a deadline so you wouldn’t spend too much time thinking.
8. Not Calculating Instalment
Instalment is not always a good solution to afford your property. Though it might be tempting for middle-class people, a careful calculation is required before you apply for one. It is known that the instalment will make you end up paying more. But do you know how much more, to be exact?
Do the math inaccurate number. Give it room for unexpected floating rates and other fees that may come. Then, compare the results with the estimated price of the property. You don’t want to spend years paying for a house with a lower value. Because, how are you going to earn the capital gain anyway?
9. Terrible Wealth Management
No matter how good you are in property investment, never gamble all your money in it. Property is not a liquid investment, which means you can cash it out anytime you need it. Diversification is vital for wealth management, just like an old saying “never put your eggs in one basket”.
Insufficient liquid assets would be troubling when you need sudden big cash. This situation would force you to sell your property at a discount price merely to speed up the sale. As a result, your wealth will decrease instead of increase.
The property market in Australia is undoubtedly promising. With the annual value growth ranging from 5.9% to 8.1%, who can just say no to such an investment?
But bear in mind that there is no such thing as easy money. A proper effort is required if you want to gain success in property investment. It is an endless process of learning to avoid you from these 10 mistakes commonly made by property investors in Australia.
