16 Oct Don’t Make These Investment Mistake
We all make mistakes. Even accomplished investors will drop the ball sometimes, whether that means implementing the wrong strategy or not adhering to their investment plan. However, it’s also important to avoid common errors, so here are some of the most commonly made investment errors, and how to avoid them.
If you’re buying a house to live in, waiting for the “right one,” is a wise move. After all, you and your family are going to spend a lot of time in the home, and it should be somewhere you love. The decision is emotional and often reactive.
The same is not true of investment properties. Property investment should be planned, structured and strategic. You should know the financial and non-financial requirements of a good investment property, and be able to make a decision quickly. If you make property investment decisions based on emotions, you may end up with a place you love that nobody else wants to live in.
You’ve found the perfect investment property, all the numbers stack up and it’s a bargain. In fact, it’s priced far below average market rates for the area. So, you purchase it, undertake some basic renovations and suddenly you notice that average rentals in the area are going down.
What’s the story?
A little bit of research would have told you that the council had finalised plans to move the motorway exit from near your suburb to the next one over. This was public knowledge, easily accessible and the previous owner was relying on a lack of research to sell their property at below-market rates.
If something is a bargain, there’s probably a reason. Research.
Not Being Mentally Flexible
…or, having too many rules. A list of complicated rules, that may include the necessity of trees, a minimum number of bedrooms or a sizeable backyard creates limitations for investors. Flexible investors are able to purchase in areas that those with too many rules cannot, and they are able to buy properties that inflexible investors see as a poor investment.
Just because a property doesn’t have a certain feature, isn’t in a certain location or doesn’t fit into the “ideal version” of what an investment property should be, doesn’t make it a bad investment. You should always have rules, but they should be useful and only applied when suitable.
Knowing Too Much
There is a saying, “a little bit of knowledge is a dangerous thing.” This means that when you think you know what you’re doing, and you don’t, it leads to bad decisions.
Be aware of your current level of knowledge, continually improve it but also be aware that there are probably people that know more than you. Your job as a property investor is to bring people who know more than you do
into your team and make their knowledge your knowledge. Property investors who work on their own have a far higher likelihood of failure than those who bring an effective team in around them.
It’s better to ask questions of smart people and succeed than to try and be smart and fail.