We’ve spoken to so many people over the years that have started their journey as Investor Landlords with a naive ‘she’ll be right’ attitude. It’s distressing to see the repeated mistakes that many people make. Even worse are the people who want to invest in property but think it’s too hard, risky or time consuming and don’t get started at all!
We spend a lot of time with our clients addressing the risks involved in property investment.
..and how we can stop these from occurring or slowing us down. We thought we would outline some typical pitfalls we’ve seen new landlords fall into.
Using the Wrong Professionals
is number one for us, no surprises there, right ? It’s so important to build a good team of people who can help you make the right decisions.
A good accountant, solicitor, finance broker and most importantly a qualified property investment adviser ….. all are extremely valuable and worth their weight in gold.
It’s important to consider what tax, finance and investment decisions you may need to address during different stages in your life and to structure your portfolio around your goals. Make sure that anyone who is advising you about property investing is QUALIFIED to do this and not just selling you property. Ask them that question and ask them what commissions they are making from the sale.
Treating Property Investment as a Hobby
Imagine buying a business worth $400,000. You would treat it very seriously right ? And you would have the resources and systems in place to get the best results. Unfortunately, too many people would invest in a property of the same value with a different mindset and make emotional decisions that don’t maximise the investment potential.
Thinking of a Property as their Own Home
Good investment opportunities for investor landlords can be missed because the investor thinks they would not like to live in the property. You may choose NOT to live in a certain house in a certain location but for the people who live there it’s perfect, and this may be a great investment.
Failing to Increase Rents Regularly
All landlords should regularly review rents to ensure that they are at market rates. A small regular review is much better than a large, infrequent change that can shock the tenant so much they move out. Landlords might feel daunted by increasing the rent for the first time, however the reality is that if the increase is reasonable, there should be no problems with the tenant.
Investor Landlords Losing Sight of the Bigger Picture
Try not to sweat the small stuff. If you are serious about property investing and truly want to create a better financial future for yourself and your family, you need to remain focused on building a portfolio and increasing your overall net worth position. Many people stop at one or two investment properties, when they could easily continue their investing to achieve financial independence. They also get too wrapped up in worrying about small issues that should not be stopping them from moving forward.
Paying Down the Wrong Type of Debt First
Too often we speak with investor landlords who have not structured their portfolio effectively and not maximising their personal tax benefits. Make sure you check your financial position and what strategy is best for you with your licensed Mortgage Broker.
Give us a call today and speak to someone who is qualified to advise and genuinely cares about you and your property investment journey.