Just one ill-thought out move or wrong decision can scuttle all the best laid property investment plans. Whether you're a first time investor trying to get your head in the game or a seasoned pro, there are a number of mistakes you'll want to avoid that are as simple as they are hazardous to your goals.
1. Treating property investment as a get-rich-quick scheme
For those with a lust for risk and danger, real estate investment is just one more speculative exercise that provides a much-needed shot of adrenaline. But if you're planning on building long-term wealth, rather than trying to pick properties that you can quickly flip for a profit, you should take it slow. Have the patience to let a property's value grow slowly over the course of years in an area with a proven record of returns.
2. Making it up as you go along
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If you want to be a successful property investor, you can't wing it. You've got to develop a comprehensive strategy that takes into account your long-term goals, your financial position and market conditions. This is why DPN makes sure to offer all of our clients a free property investment plan.
3. Misjudging the cost of investing
Investing in property isn't cheap, and you'll need a certain level of capital and cash reserves in order to successfully carry it out. Many people forget about expenses like council rates, body corporate fees and insurance, or don't plan for what will happen if they're left without tenants.
4. Not reviewing and updating
Once you own a property or investment portfolio, it's not a matter of just leaving it as-is. You've got to be vigilant and frequently review your investments to see how you can get the most out of them. For instance, perhaps you need to raise your rents to keep up with the market, or get rid of a property that isn't performing as well as you'd like.
5. Forgetting about tax benefits
This one's more common in first time property investment, when individuals aren't as well-versed in the technical side of things. Don't forget that there are a variety of tax deductibles that come with investing, including interest payments and depreciation.
