Successful property investment can secure lifelong financial prosperity – but through missed opportunities and common investment mistakes, you can also lose a lot of money.
Property Investment is all about buying the right property, in the right location, at the right price.
Most investors, who have lost money in Australia in the last 50 years, generally fall into three groups.
1. Those that didn’t use the best market data and opportunities of the time
Research is the key definer of success. Buying in the wrong area is often the problem here. People often buy somewhere only because they personally like the area they are living in, or feel like buying investment properties in a certain area, based on their own idea of what is going to happen in that area. There are strong emotional factors that can limit, or even topple, your success in this business.
As much knowledge of critical data and an up-to-date personalised plan, based on your particular circumstances and risk profile – is essential.
2. Those who delayed getting into the market, and leveraging up
Sometimes a case of ‘Analysis Paralysis’ – as we are bombarded with information – and delay getting involved, when we should have been well organised enough to do so. Perhaps we have had unused equity stacking up on our main property, and haven’t used it to leverage into more properties, and feel we are missing the growth cycle.
3. Those who are extremely unlucky
There are always things that are out of our control – sudden market changes, interest rate hikes, or dodgy tenants. These are the hardest to plan for – yet critical elements to consider.
To optimise our chances of success, we need then to identify key trends in the market, like:
- Population statistics – where are people moving to, what areas are growing in numbers and/or becoming ‘desirable’ suburbs
- Understanding the types of properties people want – understanding what sized properties are tenants and buyers looking for in growing areas – is it a family area, or a new student suburb, for example
- Considered Land size and uses in the area – sheds, garages and carports
- Development, such as sub-division, potential
Another key consideration is the fact that people buying in today’s low interest rate environment, could find themselves in trouble if they don’t allow for rates to rise in the future again.
We have to be very careful about the voices we listen to, and the media we watch. Think of those such as the speculators and spruikers telling us a particular development is the best.. it’s easy for us to jump on that rather than using diligent research, seeking good advice, and sticking to our own plan.
And yet, without a clear investment strategy, research is just a collection of facts.
A sensible strategy would be to consider how the relevant facts integrate with and apply to your particular circumstances to determine the best path for you to take.
A properly structured property wealth plan gives investors the very best opportunity to optimise their potential, and it includes well thought out structures, strategies, questions and ideas – at least when it comes to investing to maximise returns.
Of course there are important considerations around facts like where our primary residence/s are – but when it comes to property investing for returns, then guidance from the right adviser will help investigate and integrate not only the relevant facts and options around your scenario – but your own questions and knowledge – to form a plan of attack.
Experts encourage us to get, ‘investment ready’, and we know that in today’s market we sometimes have to be ready to make quick decisions – or risk losing the best opportunities, and making investment mistakes.
If we are not careful, someone with more experience is able to jump in and take advantage of the best properties before we are ready.
Bad decisions can be the difference between owning a single property and a multi-million dollar property portfolio at the end of the day.