There are a lot of Do's & Don't when it comes to property investing and it's important to understand what you are getting into and what are some of the common mistakes that are made so you can avoid them yourself. We have outlined the 5 most common mistakes made by newer investors that we see everyday.
1. BUYING FOR THEMSELVES
Knowing what you like is one thing, but when you are buying an investment property you need to think like a landlord and not a tenant. Look for key features that will add value for tenants like being close to shops, public transport & schools.
2. NOT DOING ENOUGH DUE DILIGENCE
Buy a property without doing the proper research is dangerous. You should look at several comparables as well as the rental market in the area. Work of conservative figures so that you are prepared for any slumps in the market. Know your target demographic, is the area full of students, retirees or mainly families. You want to avoid buying a property that is of no interest to the majority of would-be tenants in the area.
3. UNDERESTIMATING COSTS
It’s easy to overlook fee’s and charges associated with buying a property, make sure you a clear on all the fee’s before going to contract. This also extends to any work that might need to be done to the property to have it be ready to rent out or even just furnishing the property. Get several quotes on the work before making any decisions.
4. NOT LEAVING A BUFFER
This is especially important when building, you should always have a buffer of funds built into the cost of construction incase of unexpected delays or unforeseen building costs. This buffer could be anywhere from 5% to 10% depending on the size of the project. You can reduce the potential size of the buffer by making sure you do enough due diligence but you can never foresee all issues so make sure you have something left over just incase.
5. TRYING TO DO THE WORK YOURSELF
Many newer investors try and save money buy doing everything themselves. This can lead to costly mistakes. Build yourself a team, find a property manager, repairman and accountant that you like and use their skills to help propel your property portfolio.
First National is Australia’s largest independent real estate group and the only 5 Star Canstar rated real estate group in Australia