Expanding on one of our previous posts The 5 Most Common Mistakes of New Investors, we have outlined some traps that catch out even experienced investors. Have you been caught out or are you about to learn what to avoid?
1. NO STRATEGY OR PLAN
Investing without a well thought out plan or strategy is suicide. You need to know you goals and how you are going to get there. This will help inform your buying decisions and help prevent you from making poor decisions as you go.
2. NOT GETTING ADVICE
There is no need to try and reinvent the wheel. Other people are already successfully investing in property. Get advice from those people, pick their brains, read books from famous investors and learn what they look for. Thinking you know everything is a sure way to find out that you don’t.
3. GETTING BAD ADVICE
You should always look at the person or people you are getting advice from and ask are they doing what I want to do? Should you get property investment advice from a stockbroker who doesn't own any investment property? Or that cousin that works 9-5 in an office but has an opinion on everything including the easy steps on “how to get rich quick”. Qualify your advice before acting on it.
4. GETTING GREAT ADVICE BUT NOT LISTENING TO IT
If an experienced and successful property investor is taking the time to give you advice then it’s important that you take note and use that advice where applicable. Not using good advice is the same as not getting any advice in the first place.
5. GETTING EMOTIONALLY ATTACHED
Treat property investing as a business. Take the emotion out of it and treat it as a numbers game. Take your time and don’t rush into a decision just because you fell in love with the property or area.
6. TOO MUCH CREDIT
Being able to borrow money and how much will shape the types of properties you will be able to buy. Having a good credit history is important and credit cards can help with this, however, having too many credit cards with high credit limits can be seen as a risk to lenders and may affect your serviceability. If you don’t use a particular credit card anymore consider canceling it or reducing the limits on your cards if you rarely max them out.
7. POORLY STRUCTURED LOANS
There is thousands of loan products on the market today and finding the right one for you can be like finding a needle in a haystack. Do you homework, look at several lenders including banks and other financial institutions. Talk to brokers and get advice from other investors about what is working for them. Refinancing a loan or even restructuring can be a costly exercise is some situations so it’s important to be clear on the pro’s and con’s of your loan before locking it in.
First National is Australia’s largest independent real estate group and the only 5 Star Canstar rated real estate group in Australia