You may not even be aware of it, but chances are, you could be putting your financial future in jeopardy by making these property investment mistakes.
Investment mistake #1 | Making a strategy fit an area
Having a strategy is important if you want to succeed as an investor. However, rigidly sticking with the strategy rather than focusing on the result can have costly consequences.
For example, if you’re pursuing a ‘renovate for profit strategy’ and are looking to invest in Moreton Bay in Queensland, you’re likely to be targeting 30 years old un-renovated homes.
But this type of property isn’t what the demographics of that area want.
These people have dual income, high-paying jobs; they want a 4-bedroom, 2-bathroom, double lockup garage house. They want a relatively brand new or up to five years old property, not a renovated 30 years old property.
Therefore, it’s crucial to really understand the demographics of an area and what’s in demand to ensure you’re buying the right product.
Investment mistake #2 | Becoming emotionally attached to an area or property type
It happens to many of us. You come across a property expert extolling the big profit potential of an area and jump onto the bandwagon.
If we stay with the same example; an expert recommends Moreton Bay and suggests looking at units or townhouses so, you may probably want to target them too.
Therefore, you go into the area having already developed a personal preference towards townhouse or units because you’ve been told of its potential.
But based on research on the demographics of the area, it shows that a 2-bedroom unit will be a liability. The population demographic aren’t keen on this type of property; they want relatively new, 4-bedroom, 2-bathroom, double lock up garage.
To ensure you avoid this mistake, look at what’s in demand in the area and understand your potential buyers and renters, not blindly following an expert’s recommendation.
Investment mistake #3 | Relying on partial advice
It’s human nature.
When it comes down to choosing between paying more for something better and getting a cheaper but lesser version, most of us will opt for the latter and although we know instinctively that you get what you pay for, we’re still attracted to the short-term “savings”.
This is especially true with property investment advice.
Unfortunately, trying to save money by relying on cheaper but incomplete advice could cost you more over the long term because you end up filling the gaps with your personal preferences, emotions or skills and you may get it completely wrong.
If you have to rely on a report or recommendation, make sure that it gives you all the information you need to make an informed investment decision.
Investment mistake #4 | Following the herd
There might be safety in numbers, but when it comes to investing in property, more investors in an area doesn’t always spell profits.
Joining the herd creates a lot of competition in that market and a lot of investors in an area means higher competition for renters and for buyers.