As with anything, there is a learning curve when it comes to becoming an Australian property investor. As you begin to get a grasp on the basics of investing in real estate, it's easy to make some simple mistakes.
While this may be natural, limiting the incidence of such errors is key to ensuring your real estate portfolio goals remain on track. Being aware of some of the more common pitfalls in the first place can help make sure you avoid them. The following are just a few.
Not doing research
We've all heard stories of home buyers who have seen their properties' values skyrocket. The RP Data Pain and Gain Report revealed that 30.5 per cent of all properties re-sold during the three-month period doubled their original value.
But experiencing such fantastic results isn't just a matter of buying a property at random and hoping the market will take care of the rest. If you're hoping to latch onto a property that nets you a stellar return, you have to do some research - factors such as sale prices, rental vacancies and average price growth can all be good indicators of whether or not an area is ripe for investment.
Counting on continued low interest rates
Property investment requires a certain amount of financial strength. If you want to be successful, you need to be able to make your regular repayments for your investment property. Some investors look at the current prevailing record-low cash rate, and see the low interest rate environment as favourable to their investment goals.
But investors need to look past the current conditions, and consider if they'll still be financially sound if interest rates rise - which some commentators believe will happen next year. Investors should also make sure they have enough saved up to cover costs such as mortgage fees, council rates and other expenses.
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Missing a strategy
Buying a property can mean the difference between a comfortable retirement and one that's found wanting. You want to have a clear, coherent plan in place for making sure your real estate portfolio will indeed help you meet your financial goals.
This requires asking yourself some questions regarding what your time-frame for reaching your goals is, and what kind of target you're looking at hitting. It also requires sitting down with a property investment consultant to look at what kind of property would most suit your plan.
Lacking patience
Property is not like shares - while the degree of capital growth can be high, you also need to give it time to accumulate. As the Pain and Gain report noted, properties held for an average of 9.8 years were more likely to record a profit on re-sale than those held for only 5.6 years.
Real estate investment isn't a get-rich quick scheme. The less it's treated like one, the more chance there is of benefiting from it.