11 Shocking Truths Everybody Should Know About Property Investing Traps

The 11 Shocking Truths Everybody Should Know About Property Investing Traps That Could Cost YOU Ten’s of Thousands of Dollars & How To Avoid Them.

This report is packed with valuable real-life facts you need to know before you start your property investing journey.

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Shocking Truth #1.

Your Bank Manager is Your Worst Enemy

When it comes to property investing CASH FLOW IS KING!

I know this first-hand from when I started investing in early 2000. I bought my first 5 properties without any knowledge of how finance structures work, what is the difference between a Home Loan and an Investment Loan? How to set up cashflow structures? etc.

My bank manager was costing me a small fortune because his job was to keep me in debt not to teach me how to grow and accumulate my wealth.

That’s a big difference. A bank manager is not a wealth creation strategist he is a bank manager doing a job making money for the bank, NOT FOR YOU.

The other thing is if you are property investing and you go to your local bank manager guess what, he or she is only going to slot you into one of their products or loans. This means you only have one choice. Whereas when you use a finance broker his/her role is to give you multiple options and formulate a finance structure suited to your property investing strategy.

My Property Investing Tip here is:

• A Bank Manager is not a Wealth Creation Strategist or a Property Expert
• You’re investing in property to secure your family’s future and build wealth.
• The right finance structure can make you money, the wrong finance structure can cost you money and future wealth.
• A broker who knows how to set up a financial buffer for you – some money set aside to de-risk your investing in case of unforeseen circumstances is priceless!
• A quality finance broker is a key part of your TEAM.

Shocking Truth #2.

Seminar Spruikers Make Money Off YOU, not the Other Way Around

I have been to countless “Get Rich Quick” property seminars and the only people I see making money are the seminar promoters on stage.

Look, getting sucked into property spruikers and their razzle-dazzle seminars promising to make you all millionaires through the property is one of the biggest traps I see Mum & Dad investors fall into.

There is “NO GET RICH QUICK SCHEME” that works!! End of story.

You spend 2 or 3 days at these multi-layered events where they hype the show up and make wild promises with massive disclaimers in small print. Their job on stage is to get you emotionally charged so you buy their products or programs at the end of the event.

The problem is on average, only around 3% of people who buy products or programs ever complete the course. The other problem is once you get home and you are all alone and the hype has worn off you then fall back into the same patterns and same routines and you experience overwhelm then it becomes all too hard.

In my experience, if they also sell property on stage usually you will find you are purchasing an over-priced property in markets that have peaked and oversupplied (more on that later).

My Property Investing Tip here is:

• GET RICH QUICK SCHEMES DON’T WORK.
• Do not go out and pay a seminar spruiker $5K – $50K for some trumped-up property program or course or inflated property purchase.
• Instead, find a professional property adviser with a TEAM of hand-picked experts that can work with you one on one and develop a property investment strategy that is personally tailored to you and your long-term goals.
• Hands-on coaching and mentoring will fast track your property investing success.

Shocking Truth #3.

Property Marketers Charge Higher Commission Fees That Affect Valuations

In the property investing market place, the marketing companies are the people in charge of making sales on behalf of the developers. Their job is to get volume sales so the developer re-coups his money in the fastest possible time frame.

Some of these companies attract fees of $30K to $70K on every transaction. The unsuspecting buyers’ problems start to appear usually when it comes time to settle the property. That is when the purchaser finds out that the valuations don’t stack up.

An example of this is you purchase off the plan for $550K then 18 months later your property is built and the valuation comes in at $500K. You now have to find a way to stump up the shortfall of $50K or risk losing your deposit.

I have seen buyers walk away losing anywhere between $50K and $100K like this. Melbourne’s Docklands precinct is a really good example of this type of exposure to risk.

My Property Investing Tip here is:

• Know whom you are dealing with. In my business, I deal directly with a handful of land developers and a handful of project builders.
• We have a good long-term relationship working in the best interest of our purchasers and clients.
• Stay away from the big marketing firms who are all out there looking to make a fast dollar at your expense.

Shocking Truth #4.

Be Aware of the HYPE of a “Booming Property Market”

Here is your number one problem when it comes to so-called “booming markets”. By the time you start hearing the noise in the media and the press about Booming markets, it’s usually too late to buy-in.

Developers and property marketers are brilliant at getting you sucked into property investing in a booming market (this is the peak of the market and the last part of the property cycle you should be buying in). Property spruikers are incredibly good at using the emotional pull of profits to their advantage and it’s one trick that ends up costing many investors tens of thousands of dollars.

When property markets are booming, there’s a lot of “buzz” and excitement and it’s during these times that it’s very easy for novice or first-time property investors to be easily drawn in by the energy and hype that surrounds those markets.

It’s tough because you can see growth going on in those markets. You can get EMOTIONALLY sucked into the tidal wave of MASSIVE GROWTH and potential upside.

The smart investor has already been in these markets for 2-3 years and is now looking elsewhere. When you are emotionally enticed it can be very difficult to resist.

During these BOOM times, you will also find well-oiled sales machines, real estate agents, property spruikers and heavily invested developers who are all flying their flags high saying “Hey, this is the best market in Australia, you’ve got to invest now, you’re going to miss out if you don’t.”

My Property Investing Tip here is:

• Learn how a property clockworks.
• Do not buy at the peak of the market (12 o’clock).
• Smart investors are looking to buy at 7 o’clock meaning the market is just starting to rise and you get in early before all the media hype and buyer frenzy catches on.
• Remember different types of properties in different types of locations can be at various stages of a “property clock”.
• You MUST stick to a Strategy
• Shocking Truth #5.

How Developers Low Price Advertising Can Cost You Thousands of Dollars

This is a marketing ploy many developers have been using on property investors for years and catches buyers unawares when they are already in too deep to change things.

Here’s a typical scenario… The slick developer puts up some huge signage offering the best deals in town.

For example…They offer 4 bedroom homes, starting from $395,000 and you go “Wow, that sounds really good. $395,000 for a 4 bedroom home?” Unfortunately, when you look more deeply, there are many items not included in the original contract of sale.

So, what happens is a purchaser goes into the sales office and ends up entering into a contract to purchase a property, thinking that they’ve done a great thing. They think they are getting a good buy, a real bargain!

Unbeknown for the potential buyer or property investor there are many items not included in the original contract and there are certain contract clauses they just don’t understand.

The big mistake was the purchaser has not had legal advice or cross-checked the contracts and the inclusions specified. Suddenly they find out the contracts do not include driveways or landscaping or fencing or window dressings. And these are all items that can substantially add to the price you end up paying.

I’ve seen situations where people have been so excited by the original sales pitch they have neglected to look into the inclusions in detail and they’ve been stung with tens of thousands of dollars of “additional costs” to get their property to a point where it’s habitable. And this isn’t just a rare occurrence, it happens all the time.

I had a potential client come and see me and I advised him on what he needs to look out for but unfortunately, he went his own way and his house and land purchase ended up costing him an extra $70,000.00 BUYER BEWARE!

My Property Investing Tip here is

• If it sounds too good to be true, it usually is.
• Get advice from a qualified property investment advisor and never sign contracts without getting legal advice first.
• Always look for fixed-price contracts with full turn-key inclusions. Sometimes it’s not what is written into the contracts that you need to look out for it is also important to know what hasn’t been written into the contracts?

Shocking Truth #6.

You Have to Buy with Your Head, Not Your Heart

Buying an investment is not the same as buying your family home. Take the emotion right out of it. If you are property investing you should be looking for properties that have owner-occupier and investor appeal.

You don’t need to love the property, you just need to make sure the numbers and figures stack up, so leave your likes and dislikes at the door and focus on capital growth drivers and make sure you buy aninvestment property in a location primed for strong long term capital growth.

Knowing the numbers and the right area research can save you many thousands of dollars and helps you avoid making a big-money mistake when you are property investing.

My Property Investment Tip here is:

• Before you do any type of property investing make sure you have a Property Investment Analysis in place.
• Know the numbers inside the property before you make the purchase.
• Treat this as a business transaction, not an emotional transaction.

Shocking Truth #7.

Most People Only Invest Near to Where They Live

Another big mistake that can cost property investors lots of money is they only look at investing where they live. This is a costly mistake as different areas are doing different things during all stages of the property cycles.

The reason this happens is that they haven’t acquired the right knowledge on the property investing markets. They have a fear of making a mistake and they have this crazy idea that the property must be close by so they can drive by and keep an eye on it. (That’s the job of a quality Property Manager, not you).

My Property Investing Tip here is:

• Get specialist advice so YOU know your target market.
• Make sure you buy the right property for its location.
• Put yourself in the shoes of your future tenants – and for potential futures owners for capital growth.

Shocking Truth #8.

Property Investing Without An Investment Strategy Will Cost You Money

Many people I have come across in my property investing journey have made big mistakes when buying property. Many of them have just bought the property without having any sort of strategy or long-term plan.

Property investing is all about having a strategy to help you achieve your goals. I’m amazed when I ask people why they invested in a particular type of property or a particular area and this is the type of response I get… We took advice from a well-meaning relative or we read on a blog somewhere about the next big thing in real estate, but it turns out these plans just don’t suit your bigger picture.

Another one is they tell me a friend said they invested in a certain area so they thought it would be a good idea too. Sadly, I’ve seen people invest in one-horse towns, mining areas only to see their investments drown and go downhill.

Remember, your investment strategy is just that – YOURS.

My Property Investing Tip here is:

• Put together a property plan (Your Property Adviser, Accountant, and Finance Broker Can Assist You).
• Stick to your guns, don’t lose sight of your short and long-term goals.
• Adhere to a time-tested property investing strategy that is known, proven and trusted, before you delve into buying.

Shocking Truth #9.

Developer / Builder Contract Clauses Can Cause Major Cashflow Blowouts

One of the biggest cons that I see about price blowouts is a developer having an open-ended clause in the contract which enables them to come back later to hit you with additional cost blowouts due to things like foundations requiring additional works etc.

This means when they start excavation works and hit a solid rock in the ground or other earthwork issues they can then “LOAD UP” the contract price and before you know it YOU are up for ten’s of thousands of dollars in extra costs.

This novice investor mistake has a major effect on your cash flow and can set your wealth creation plans back for many years!

You can’t afford to have any open-ended clauses in your contract that allow price blowouts to creep into the equation. It could cost you much more than you expected to finish building that property.

You know, your “bargain” $395,000 property purchase could end up costing you $495,000. And your expected holding costs of $50 a week could blow out to $200 a week and really start hurting your back pocket and impacting on your quality of life.

My Property Investing Tip here is:

• GET PROFESSIONAL LEGAL ADVICE
• Make sure you understand what you are signing with contracts.

Shocking Truth #10.

Should You Be Property Investing for Rental Returns?

I hear a lot of people saying they are looking for good rental returns. Yes, that’s fine but it’s not the main criteria when it comes to property investing. I believe Capital Growth is the main reason to invest. Good rental returns are like the cream topping on your sponge cakes!

So if you’re looking to buy an investment property and you can’t quote vacancy rates and median rents in your area, then you need to go back to the drawing board.

You should have a thorough understanding of the rental price you’re likely to achieve and how this compares to your loan repayments long before you’re signing a contract of sale, otherwise, you could find yourself putting your hand in your own pocket to fund the shortfall each month.

The bottom line is YOU NEED TO KNOW THE NUMBERS BEFORE YOU INVEST!

My Property Investing Tip here is:

• Do a full analysis of the numbers inside your investment (Property Investment Analysis)
• Get a rental appraisal before you purchase a property.
• Speak with 3 different local agents regards vacancy rates
• Make sure you purchase property types that suit rental demand for the area you buy-in

Shocking Truth #11.

Doing The Basics Will Protect Your Property Investing Strategy

Rushing in and making hasty decisions based on HYPE and GREED will cost you a fortune.

Developers and marketers are brilliant at creating hype and get rich quick schemes so watch out for your own EMOTIONS! See past their Bulls**t. It’s not all blue sky, blue sky when it comes to property investing.

When you have done your proper property research and due diligence, you have had your finance structured, your cash flow is under control and you are now purchasing property here are a couple of things to make sure you don’t overlook.

• Get an Independent building inspection.
• Has an independent valuation done?
• Make sure your insurance and finance are watertight.
• Hire a reputable property manager.

Sit down, make a detailed list and be sure not to skip a single thing, because it could really come back to bite you.

The Smarter Way to Property Investing Success

Your first or next property investment is a great learning opportunity, so use it wisely. Don’t make the same mistakes as most novices the next time you buy a property.

Keep it simple, stick to the basics.

Fine-tune your strategy, learn what not to do, and implement those contingency measures that you didn’t realise you needed last time – and you’ll be well on your way to building a profitable property portfolio that sets you up for financial freedom.

The smartest and safest way to invest in a property that I know of is to use a qualified TEAM of Advisors whom all Invest in Property themselves.

It’s YOUR short cut to property investing success!

Check out my amazing offer to you…. read the next section!

Conclusion

After reading this report I hope you’re now headed towards a safer and more prosperous property investing experience, now that you know how to avoid these common Shocking Truths.

And, if you do find you would like more information and support, I’ve got a special offer that could be very useful for you.

Your Special Invitation FREE 30-minute Planning & Strategy Call With Tony Harrington

It’s a FREE 30 Minute Planning & Strategy Call Valued at $495

On the call, we will discuss your biggest Problem or Challenges around property investing / finances and how you can overcome them.

I will be sharing the specific steps I take to ensure that you don’t make the costly mistakes when property investing that I described in this report.

I’ll show you how my TEAM helps YOU take control of the process to give YOU peace of mind and a smooth investment journey.

Here’s the BIG ONE…I will show you how to avoid dodgy investment areas and property types and much much more.

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I look forward to speaking with you soon and I wish you every success with your property investing.

Tony Harrington | Property Investing Mentor & Advisor

www.yourpropertyinvesting.com.au

[email protected]

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