It is very common for anyone considering buying a property to feel scared investing. Investing in property has been proven to be one of the most rewarding financial decisions to achieving financial independence. Owning an asset that grows in value and pays you a regular income stream (through rent) makes this a very smart investment strategy.
If you are scared investing in property, you are not alone. We have helped many people mitigate these concerns so that it doesn’t limit your success.
Here are a summary of some problems we have helped buyer deal with in the lead up to buying an investment property.
1. Lack of knowledge
If you lack knowledge in buying property, its naturally difficult for someone to proceed. These type of people feel very scared investing. They worry more about losing money than accumulating it. They also worry about the unforeseen maintenance costs or encountering a bad tenant.
Seeking advice, learning about the market, outlining your objectives and understanding your cash flow will help you master the lack of knowledge.
2. The embarrassment of being unintelligent
This is a situation that is more common than you think. Many people are proud to have saved their money. However once that’s achieved, become embarrassed to discoverer they don’t know much more about investing. They additionally feel overwhelmed and confused. Seeking professional advise will help you identify your borrowing capacity and help you learn more about investing.
There are many reading materials available, but be careful that you don’t start over-reading. This can turn a comfortable investment decision into feeling more scared investing than before.
3. Scared to be ‘ripped off ‘
The property market can be very complex when you try to read all the reviews and opinions. Public media don’t write all of the great stories property offers investors. This is because it doesn’t attract as many readers.
Hearing that someone stole your money investing property is nearly unheard of. In Australia we have strict laws in place to protect buyers, sellers, developers and tenants. Seeking property advise will help you respect the true value of investing in property.
4. Worried your decision will make you bankrupt
Any investment decision has risk. Borrowing to invest amplifies this risk, but all of these can be calculated in advance to buying. Situations like interest rate rises, maintenance costs, losing a tenant, etc. can be discussed prior to committing.
Setting up a simple cash flow spreadsheet will allow you to identify what would trigger a bigger problem to another. Buying a property in the right location will also reduce the risk of many risks. An example, buying a rural property may have a higher risk of being untenanted as work opportunities are significantly lower than an inner city location. However the cost of an inner city property would require more capital or a larger loan. In that case an interest rate rise would effect an investor who needed to borrow more money to invest.
Summary
In summary, everyone (including an experienced and successful investor) doesn’t want to let go of their hard earned funds. It doesn’t take much to feel scared investing.
Perhaps consider retaining a ‘buffer’ cash account. This will help you part with some of your money. All investment assets and strategies hold some form of risk. Learn to appreciate that buying an investment property is a tangible asset. You can swing past at any stage. You can earn a regular monthly income stream (rent), while over time the property will increase in value. We have consistent population growth who all need to be housed. Do your research beforehand, talk to some experts (like Crest Property Investments) and buy what is affordable to your budget.
The ultimate method to proceeding comfortably is to mitigate them one-by-one. This will help reduce feeling scared investing.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
May 2018
