Property Investor Must Read
Property investing may be simple, but it’s not easy. And that’s not a play on words.
When you look at the statistics and see that most investors never get past their second property, you realise that most who get into real estate won’t achieve the financial freedom they were looking for. While it’s possible to make good money in property, it will be more of an uphill battle in the current slow real estate markets. However, avoiding some classic mistakes will help keep you on the right track. So let’s look at them…
1. A plan? I’ll just go ahead and buy something
Deciding you’re going to be a property investor is more complex than just buying a property. Approaching investing without a well thought through strategy that fits in with your long-term wealth creation goals and financial situation is a fool’s journey. You would never take off in your car without knowing where you intend to go and how you plan to get there. Map out where you want to be in five, ten and twenty years time, then construct a detailed plan to take you there.
2. I can do it all myself!
All successful property investors build a great team around themselves. I often say that if you’re the smartest person on your team, you’re in trouble. However you can’t blindly hand over financial control to your finance broker, accountant or solicitor. It’s your responsibility to gain knowledge about the property investment business and become financially smarter – what I call financially fluent. This will teach you the right questions to ask your advisors.
3. Research …. who needs research?
I’ve met investors who researched the purchase of their new car more carefully than their investment property. They make emotional purchases in locations that are in their comfort zone.Many buy their investment close to where they live, where they holiday or where they want to retire. The due diligence that goes into purchasing an investment must be more rigorous than that. As an investor, there are only three good reasons to “fall in love” with a property: it fits your investment strategy and goals, the numbers work and it has upside potential. Never let your emotions drive your investment decision; that’s what home buyers do, not people looking to create wealth with real estate.