If you're a real estate investor or looking at buying an investment property for the first time, here are the mistakes you should avoid.
We'll be sharing some common property investment mistakes that we've seen over the years. We'll also provide you with some tips to avoid them. That way, you can successfully build a property portfolio that aligns with your real estate investment goals and provide you with a healthy passive income.
Mistake number 1 - Not having a property investment plan
Yes, it's true. When entering the property investment space, some investors don't actually have a plan. It's so important to account for your living costs and the the kind of lifestyle that you want to create for yourself. A smart property investor should be able to understand the bigger picture and determine what it will mean for them in years to come.
To avoid making this common mistake, develop your long term plans and goals before making the commitment. Determine what these goals will mean from short and long term perspectives. Set realistic targets and constantly review your plan to see how you're tracking on your journey.
Mistake number 2 - Having a good finance structure
Having the right finance structure is just as important as finding the right investment property. It's crucial to understand and track your finances, especially if you own an investment property. As a real estate investor you need to ensure that you're constantly reviewing your home loan rate.
To avoid financial hardship when owning an investment property, we recommend working alongside a mortgage broker. They can help to ensure that the best structure is in place for you.
They'll also structure your finances in accordance with your plan and goals. At REIF, we have a national team of qualified mortgage brokers who work to structure the finance of investment properties daily.
Mistake number 3 - Don't let your emotions come into play
As humans, it's easy to let emotions get the best of us. Especially when we make big commitments like investing in real estate. New real estate investors generally base their decisions on their emotions. Though, it's important to replace emotions with number and logic based decisions.
You can overcome emotional based investing by researching the type of property you want to purchase and the location demographics. It's also important to engage yourself with a specialised property investment team who will help you to understand the logic and numbers behind your investment goals.
Mistake number 4 - Not having a buffer or war chest
A war chest is a financial reserve established to ensure you're able to cover yourself for unexpected costs when money is tight. To read more on war chests, check out this link. Essentially, any smart property investor should have one of these in emergency situations.
We usually recommend saving a proportion of your salary each week into a separate financial reserve fund. This can be simplified by asking your bank to set up automatic deductions from your pay into this separate account. It's important to build up at least six months worth of income to be able to support your investment property(ies) and your lifestyle.
Mistake number 5 - Not having the right team behind you
When purchasing an investment property, it's so, so, so important to have a specialised team behind you. We CANNOT stress this enough! What sets us apart from a lot of property investment companies is that we have specialists in all the fields required to support your investment strategy from the beginning to end. Our team is made up of research and property specialists, mortgage brokers, accountants, and legal experts.
Reach out
Are you wanting to invest in property? Avoid the listed mistakes and get in contact with our national team of specialists. We will be able to point you in the right direction and set you up for financial success.
Ph. 1300 130 932
Email: clientservices@reif.com.au
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