Not Having A Preventative Maintenance Programme
Most property managers handle maintenance issues in a very reactive manner. Smoke alarm compliance, minimum housing standards and so forth are often treated with less significance than should be, leaving you as a landlord potentially exposed. It is essential that your property manager approaches maintenance and compliance with a preventative mentality, and has a clear plan to ensure you and your property is compliant, and that maintenance is managed with as much of a preventative approach as possible.
Not Having The Right Landlords Insurance, or None At All
Knowing what you are covered for is critical - not all insurers are the same. It is important to fully understand what your insurer will cover, what their disclaimers involve, and that you are dealing with the right landlord insurer, as often, the price of a premium doesn’t reflect the level of cover. Speak with your investment property professional to get their opinion and advice.
Buying The Wrong Property
More often than not, people come to us with a property which they bought, because they were told, or felt that they need to buy an investment property, and have done so without a plan, and acted on impulse. With a red-hot market and so many properties to choose from, it is easy for first-time investors to jump on the first property that becomes available. Word of advice? Hold your horses. If you want to avoid buying the wrong property then keep an eye out for the following:
Is it an investment-grade property?
What is the land value?
What is the past sales history of the property?
Consider the property’s proximity to shopping strips, hospitals, schools, arterial roads and so forth.
Is there potential to add value?
How does this purchase fit into your long term goals?
When in doubt, always consult with your property professional for accurate advice to avoid investment mistakes.
Not having a solid plan
All great things (and solid investments!) start with a plan. One of the biggest property investment mistakes people make is not asking themselves why they want to invest in property; what the overall goal is; when do they want to achieve it by and what they are prepared to sacrifice in order to achieve this goal. The last thing you want to do is to invest in a property without knowing how it will generate an income, and what it will mean for your future plans and financial freedom.
When you get started in property investment, consider your property investment strategy prior to getting caught up in the property buying frenzy. When it comes to developing a plan, working with an experienced property strategist can be vital in the overall success of achieving your desired goals.
Acting on emotions rather than facts & professional advice
When it comes to property investment, think with your head and not your heart!
Emotions play a huge role in investment mistakes, and being a property investor means knowing how to put your emotions in the back seat. You should always approach your investment property as a business. That means, not falling in love with your property so much that it becomes the very thing that causes you and your investment goals to become stuck.
Being analytical and objective is the name of the game when buying an investment property. If you see a property that takes your fancy, sleep on it and gain more insight into the capital growth and rental yield prior to making any rash decisions.
It can be prudent to engage the services of an experienced property strategist to assist you on your journey to financial freedom.
Not properly calculating & allowing for all costs
On top of mortgage repayments, investors also need to take into account finances including maintenance costs, repair bills, strata fees, property taxes, insurances and other incidental expenses. Understandably, this can all add up!
When investing in property, it is a good idea to create a maximum limit and to set aside an emergency fund for any unexpected costs or issues associated with managing a property.
On top of this, always make sure that your investment is financially sound. Make sure you have enough money stowed away to put down a decent property deposit and have enough to pay back those monthly loan repayments. A good rule of thumb is to have 2-4 months of rental income saved up as a financial buffer to avoid being in a constant state of financial stress.
Working with an experienced property strategist can be a great advantage in avoiding this costly mistake.
Not thinking long term
Real estate needs time to appreciate in value. The longer you spend in the market, the higher your capital gains will be. If you are hoping to get a good return on your investment, then avoid making the mistake of investing short-term. Sure, it may provide investors with a higher rate of returns, but it also comes with a higher risk. Remember, slow and steady often wins the race.