Property investment of any kind involves risk and no form of investment comes with 100 percent success. But, reducing risks and knowing how to avoid mistakes that can be costly, will allow you to increase your rates of property investment success. Let’s look at the common mistakes property investors make and how you can avoid these.
6 of the Most Common Property Investment Mistakes
1. Rush Buying – Many new property investors are too keen to get started and believe that the quicker they get into the market, the faster they can make a profit. But, this couldn’t be further from the truth. Buying an investment property is a long-term investment that should be thoroughly researched before any decision is made to purchase. Focus should be on the condition of the property, its location in relation to amenities, and growth in the area.
Soundly built property, near a park or the beach and close to shops, schools and transport typically make for good investments. If you buy in an area that is earmarked for development, then this can increase a property’s capital value at a later date.
2. Think with your head, not your heart – When you buy an investment property you need to leave your emotions at the door and think like a tenant. You are buying a home for someone else to live in, so you want it to be appealing to a renter. This will also increase your chances of creating a strong rental yield. All investment property should be bought as a business proposition rather than as a home.
3. Prepare yourself financially – Many investors think they can afford to buy an investment property and they even start visiting open inspections, but they don’t get themselves prepared financially. This can then lead to disappointment. So, before you start to look at property, think about obtaining your credit report and working on improving your credit score.
4. Know what costs are involved – It costs thousands in fees to buy property, so calculate all of your costs before you buy. Work out stamp duty, mortgage title transfers and conveyancing charges. Then budget to cover these costs.
5. Research the market – Sound property buying comes from knowing the market. Research different areas. Look at property sales in those areas and work out what determines a ‘good buy’. Know what represents a high and low property price in an area.
Do you want to know more about property investment loans? If so, then contact eChoice today.