How to Lose Money as a Property Investor
Do nothing and don’t heed facts.
There are other ways of course, but in this scenario, opportunities come and go and if you’re not ready to grab them as they come your way, then they pass you by…in fact you don’t even see them!
Opportunity is only available when you can recognise it and are prepared to act on it.
The key is to evaluate where you are as a property investor, where you want to go and be as a property investor, and then to calculate a plan of action given the current (and what you see as the future) environment as it affects you.
On the downside:
A person highly leveraged with limited access to reserve funds when the rules change, is going to be struck out.
A company or individual that has taken on a development at the tail of a mini boom may get caught with their pants down if they haven’t set aside a funding contingency or risk analysis to the project.
The person who has invested on the flawed advice of migration statistics for the area they are investing in, ends up with no tenants.
These scenarios need not be you.
In every property investing project it’s up to you to analyse the investment factors, costs, risk and reward, and to take in the possibility of outcomes that are a result of things beyond your control.
Speculators do not do this…Investors do!
Take heed of the doomsday merchants because if their argument is not flawed then their future is your contingency and your opportunity.
Be aware that much of what is said by economists is very general in that it is based on a national scenario and as investors know, markets can be very specific.
Much of what the naysayers predict may not affect you or your investing region as much as it does others. For example they may use high risk and over supplied areas to verify property value decline (Noosa and Gold Coast QLD), but that’s not Marrickville, Cheltenham or Highbury.
You will need to read between the lines:
Look for demographics that affect the whole country and analyse how it may impact you and your region. Given what you read, look for peculiarities that may set it aside from the trends that these people outline, especially if they’re negative.
Look at aspects outside your immediate control and try to get a handle on what is being said: Debt ratios and the impact of worldwide lending if situations in Europe or the USA deteriorate further
The impact on the economy if China experiences a meltdown in any area – ie: banking & lending, property, resources
Is it wise to be investing in mining regions right now and if so, which ones have the future infrastructure to withstand problems in the resource sector.
Which ones don’t rely on any one mine but service them all.
These are the questions and the due diligence you need to cover as an active and successful investor.
Property investing is a complex beast, but if you educate yourself and keep your investing specific and risk averse you will do much better than most.