Property investment mistakes. No investors ever wants to encounter a mistake when implementing an investment strategy. We all do our due diligence with the aim of making money but certain mistakes can cause problems. In this market insight, we take the opportunity to share some of the property investment mistakes so you can look to avoid them in future.
1. Not understanding the demographic
Location is always important. If you understand the demographics of a location, you’ll know what type of property will suit. If you had a restrictive budget and chose to purchase an apartment, you really need to know what areas where apartment living is in demand. Not all suburbs receive them as well.
If you were to buy an apartment in an out suburban suburb such as Berwick or Beaconsfield, you may be making a costly property investment mistake. The demographics in those two suburbs for example, are families (both young and mature). They are looking to occupy a 4 bedroom stand alone house that features a back yard and a secured lock up garage. These type of people do not want to live in an apartment that has not outdoor area or a garage. You may find a cheaper property in the way of an apartment, but it’s not the primary focus when buying. Cheaper is not always better.
If the apartment was in a highly sought after blue-chip area, perhaps an apartment may be a well suited investment strategy. Again, you still need to understand the demographics in advance.
2. Being fixated on a location
It’s been proven many times over. Most people choose to purchase their first investment property in the same location as they live, or at least in a surround suburb no more than 5kms from home. This is often the case, as many buyers don’t see opportunities past where they occupy. When buying to invest in property, diversification is as important to any other asset such as shares or equities.
If a suburb or area under performs, both properties will be susceptible to this trend. We understand that it is difficult for investors to know all the areas that display a great investment opportunity. Seeking advice is very helpful and will ensure you buy in the right area, while purchasing the right property type to suit.
3. Obtaining partial advice
Most first time property investors lack confidence and experience. It’s only natural to discuss the prospect of buying a property with family and friends. Family and friends want the best for us. If they can offer some advice to help you succeed, you can trust their intentions. However in many cases, their advice isn’t appropriate to enhancing your situation.
To make an informed decision, its more helpful to seek professional advice that uses factual information over opinion.
4. Copying others
Similar to obtaining partial advice, many often try to copy the path of their family and friends. Many buyers try to copy what they read or hear from all forms of media. You must take into consideration your personal circumstances. All decisions require a calculated risk, but your personal circumstances also impose a risk to your investment decision. To avoid some property investment mistakes you need to acknowledge that not everyone has the same risk tolerance or time frame. If you are a single income earner versus a friend who is in a relationship where they have two income streams from work, your friends may have a high risk tolerance as they have more cash flow to recover.
Media can be one of the worst places to learn. Taking small bits of information from various sources on the internet can be more dangerous that having no clue.
What should I do?
In our experiences, no one has the same criteria. There are similar objectives and requirements among buyers, however each property investor’s circumstances will cause this to differ.
Before buying a property, we recommend seeking professional property advice. At Crest Property Investments we specialise in sourcing brand new and off the plan properties for buyers. We also do not charge fees to buyers! If you’d like to learn more, please feel free to contact us. We welcome the opportunity to help you make the best property decision.
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.
April 2022
