The 5 most common property investment mistakes

The notion of property investing can seem like a very exciting form of money-making, especially after all the TV shows that showcase its glamorous side. Unfortunately this stereotype attracts a lot of naive beginners who make mistakes which could have been avoided with a little prior knowledge.

This article will outline some of the fundamental mistakes that property investors make when starting out, so be sure to keep them as your guide as you head into the world of property investing.

Narrow focus

Many investors, and beginners in particular, tend to get very excited at the first site of a promising property and totally cut off all other options. This can be for a number of reasons including an authority figures’ influence.

Although third party advice is viable and definitely recommended, most of them have another agenda which is why it’s always smart to do your own research and seek advice from various sources. Avoiding this pitfall opens you up to a world of financial opportunities and rids you of financial stress by not choosing the wrong property.

Using emotions over logic

Choosing a house for an individual is a very intimate decision, it’s a place where they will call home and create many fond memories. Unfortunately, these same emotions tend to arise in people when they are choosing a property to invest in, which can lead to all kinds of chaos.

When going to look at your potential investments, always look at it as an investment to make money with. The garden in the backyard may bring back blissful memories of your childhood, but are your potential future buyers going to care? Not likely. This is a skill in its own and will require time to develop, but it is crucial to your decision making process and must be consciously utilised.

Untouched rent adjustment

Many times property investors go into a deal thinking that it is done once the papers are signed, and this isn’t so. There are several things that require monitoring for your income to keep flowing as well as increasing, and rent payment adjustment is one.

As the rental market changes, you need to be able to adjust the per price cost of your property accordingly. Most importantly, this needs to be performed incrementally rather than all at once.

Disregarding external factors

It’s common knowledge to include the neighborhood and surrounding area, but many investors underestimate its importance. The conveniences in the local area can be the make or break for any tenant no matter how good the property is, so it makes sense to pay it as much if not more attention than the property itself.

Depending on the area and your ideal tenant, the external factors can range in level of importance. In general, factors such as neighborhood safety, education, transport and shopping luxuries will all play a major role.

Not having enough capital

This applies mainly for freedom of choice rather than the ability to invest. For starters you will need enough to even invest in a house, but that should not be the marker. For a safe and profitable decision, you need to have enough to consider as many options as possible rather than the ones that fit within your budget.

This is a mistake for a simple reason, missing out on opportunities. The last situation you want to be in is having to settle for a less than great house where all you would have needed is more funds to seize an extremely profitable property.

Many of these mistakes are instinctual rather than situational, meaning that if you don’t consciously decide to avoid them, you may find yourself doing them out of human nature. Be patient and take your time, avoid these common pitfalls and it will pay off in the long run. To discuss this further, contact us today.