What are the biggest mistakes new investors make, and what’s the key to avoiding them?
Andrew Carnegie once said that 90% of millionaires got their wealth by investing in real estate. We know it’s true because we’ve seen the power of real estate at work, helping individuals lower their taxes, pay down their mortgage faster, and put more money back into their pockets.
Like all investments, there are people who hear about the opportunities in real estate, jump on the first property they see without the right research, and it ends up being a huge money-sucker.
Here are some of the most common mistakes new investors make and how to AVOID them on your property investment journey.
1. Bad selection of property
Properties are a great investment because they are a real asset… but if you don’t choose your property wisely, it can just be a really bad decision.
Many new investors find that after buying their first property on more of a whim than an educated decision, it actually wasn’t a good investment. Either the location was hard to find tenants for, or it didn’t increase in value, leaving them with a costly asset that didn’t pull its weight.
Some people may have been overcharged for the property. Others bought in the wrong area. It’s essential to do your research as in some regions of Australia, job growth is slower, and there are higher unemployment rates. This, combined with lower wages, will mean that there’s no shortage of land or properties, and prices aren’t likely to rise sufficiently over the long term.
2. Buying in temporary hotspots
While buying property in an up-and-coming area can be a great opportunity for equity growth, purchasing in a temporary hotspot can leave you in a financially unstable position. If a property is built heavily on one industry, like mining, the location may be popular at the time, but the property would lose value if the industry were to fail.
3. Poorly organised finances
One of the most common mistakes new investors make is to be financially unorganised. Not having extra cash in place to cover unexpected incidences or shortfalls can lead to financial problems. It’s vital to have a rainy-day fund.
4. Failed to consider the ownership structure
There are many different ownership options, including personal ownership, property held in a trust, or company ownership. Carefully consider all options to find an ownership structure that’s right for you.
5. Trying to time the market
Waiting to time the market for that “perfect” opportunity can lead to inaction and confusion. Whether it’s a high or low demand market, there are always good opportunities out there if you know how to find them. The longer you hold off on your investment, the longer you delay putting your money to work for you.
It’s important to remember that real estate is a long-term investment. Long-term investors who buy and hold property almost always make a profit. If property prices dip, you haven’t lost money unless you sell.
6. Confusion about tax advantages
Tired of looking at your payslip and realizing you are giving away large chunks of your hard-earned money as tax?
Purchasing an investment property can drastically help you reduce your taxes!
Depreciation deductions can make a significant impact on your taxable income, which ultimately puts more money back into your pocket. One of the biggest mistakes new investors make is, many investors don’t know how to structure their property for the best tax advantages.
7. Property management issues
Property investors trying to rent out and manage their own portfolio are more likely to come up against management issues, as are those who have opted to use an inexperienced property manager. If you want to become a professional landlord, you’ll need to look at the big picture; rather than saving money by managing the property yourself, find an experienced property manager who has a proven track record of success.8. Working alone
A second opinion can make all the difference in avoiding the mistakes new investors make! Consulting with an expert can increase your chances of success, allow you to make more profit, and reduce the problems and stress you’d come up against while working alone. Interested in finding out more about investing in the property market? Contact OneCorp for a strategy that allows you to skip all the hassle other investors have experienced. The best part is, it doesn’t cost you anything! Our services are funded by the trusted affiliates in our network hub, so you can let our team of property experts help at absolutely no cost to you! Getting started on your investment property journey has never been easier:- We start by helping you set clear goals and objectives as to what you want to achieve through property investment.
- From there, we run the numbers through proprietary software to accurately assess exactly what you need out of a property portfolio to achieve those goals.
- Lastly, we find the perfect property to make those objectives a reality!
