Property is one of the most popular and best investments in Australia. And it’s easy to see the reason for this. Aside from providing a great start for our financial goals, it’s also a great foundation for our financial freedom. Going into property investment and handling it well can help you solidify your future.
This can lead to many possible financial benefits like a stable source of income and long-term capital growth. Many of our young generations are looking to property and investment services as leverage to boost their portfolios. It may sound easy but it can also be complicated.
Property and investment service is a tough business and the field has many challenges that can trigger losses instead of income. However, with the right decision, the journey can be rewarding and exciting at the same time.
Start Your Financial Freedom With Property Investment
In creating a passive income, regular source of cash flow and building your retirement nest eggs, property investment is still considered one of the best long-term investments. This doesn’t mean you can just immediately buy one without clearly understanding your need for that property. Rigby (2020), a financial planner, wrote in Real Estate that for your investment to be successful, you should first know what to do and not what to do in this field.
We got you some rules to consider before starting your property investment journey.
- Know your budget
Understand your cash flow first before investing. Assess your financial status and capacity. You can ask your bank or financial advisor for a pre-approval assessment of your investment loan, just so you can have an idea of how much you can borrow before you look for a property. - Choose a property in a growth area
Try to get an investment property in an area where there is a high demand for rental and commercial accommodations. Survey the property location. You tend to get more renters or tenants if you’ll get a property near schools, universities and transport. - Be realistic
This is in terms of your investment goals. Are you eyeing the property as a long-term investment or do you want fast capital growth? In times when the property market is doing well, you can choose to buy a property, renovate it and then turn it over for a quick return of money and profit. However, this is different if there’s a slowdown in the economy. - Use your head in choosing
There are times when you get easily attached to the property as you start your hunting. We can be blinded by stunning views and attractive sceneries. But remember, be sure to look at both the pros and cons of the property. It may look perfect at first but it may cost you more when you look deeper into location, renovation and maintenance. - Assess negative gearing carefully
When you get an investment loan to buy a property and the income you get from it is not enough to cover your repayments, then your property will be negatively geared. There are advantages to this when it comes to tax, but it will still have damaging impacts on your finances. Not having enough income for your loan repayments, interest rate or body corporate fees can cause you financial stress in the long run. So, make sure to consult your financial advisor before deciding on buying a property investment.
Though property investment is a popular asset, this doesn’t immediately mean it’s the best investment option for everyone.
DDDC Finance is a team of experts that can guide you with your plan on financial freedom. We have experienced financial advisors and property brokers that can give you the right knowledge and advice in getting the ideal property investment for you.
Common Property Investment Mistakes That You Should Avoid
We mentioned that with the right decision, your property investment journey can be rewarding. However, we cannot eliminate struggles and problems when it comes to this business especially when you’re just getting started.
It will help to know and understand common mistakes that others made when they also started their property investment journey. Here are some of these pitfalls that you can learn from.
- Lack of planning
We can’t elaborate more on the importance of planning in terms of your personal and financial goals. As Benjamin Franklin says, “Failing to plan is planning to fail”. Failing to have a detailed plan and strategy is one of the most common property investment mistakes that you should avoid. It involves a large amount of money when we talk about property investment.
Consider things like the property price, your investment needs, the future maintenance costs and potential property growth. - Underestimating market analysis
Aside from planning, property investment also requires comprehensive research. You should survey the property area, understand what type of income you can build on the property. Making a market analysis is essential if you want your investment to be successful. - Overpaying
This is related to how important research is in property investment. Of course, we understand that searching for the right property is time-consuming and can also be frustrating. This can lead you to become anxious and just buy the first one that meets your needs and wants.
You might actually end up paying more than what the property is worth in this situation. Aside from overbidding on the property which can cause future financial debts, you might also overlook severe issues on the property conditions.
Take note that property investment takes time, patience and determination to be successful. - Doing everything on your own
Some buyers want to do things on their own like looking for the ideal property, processing documents, negotiating and making the deal. However, this is a common mistake that you should avoid. You should always consult experts that can guide you in the process of making the right purchase.
These are just a few mistakes that you should be aware of when you decide on getting your property investment. Fortunately, they can be avoided with proper planning and making the right decisions. So, carefully look at all factors, weigh all your options and talk to trusted experts before you make your choice.
Our team in DDDC Finance can give you property and investment services to guide you in avoiding property investment mistakes. Let’s make your investments and your road to financial freedom a success by working together.
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Sources:
[1] Rigby, T. (2020, February 27). 10 tips for getting started in property investment. Real Estate.
[2] Macquarie. (n.d.). Six things to do before you invest in property.
[3] Curtis, G. (2021, January 9). 8 Mistakes Real Estate Investors Should Avoid. Investopedia.
[4] Home Capital. (2022, February 11). Common property investment mistakes and how to avoid them.