What not to do when investing in property

what-not-to-do-when-investing-in-property

Perhaps you’re saving for your retirement and wondering how to do this while still covering two mortgages or you’ve always been interested in property investment but don’t know where to start. Maybe you’re already a landlord and want to expand your portfolio. Whatever your motivation, putting your money into property can be a great decision.

However, success isn’t easy - if it was, everyone would be doing it. There are several ways investors can get it wrong, resulting in significant and costly mistakes. Whether you’re a first-time investor or already a landlord, avoiding common pitfalls will help you achieve your goals.

In this blog, we look at five mistakes Kiwis typically make when investing in property and how to avoid them.

To find out more, check out our eBook - How to be a property investor in any market

 

Undervaluing location

Not being informed about the location of a property and how this impacts its value is a common mistake. While it might be cheap to buy, this isn’t enough. Investors often buy in the areas they know or close to where they live. This isn’t necessarily a mistake but it’s not the best approach.

Locations need to be chosen strategically and this means doing your research.  Find out what sort of properties are in demand and look for areas that have population growth, infrastructure and employment.

 

Getting your timing wrong

Don’t only look to invest in property when house prices are increasing. While it may be tempting to jump in when the market is hot, this could mean you end up paying top dollar.

Instead, the best time to buy is well before a housing boom when you can buy at a low price and then watch the value of your investment steadily increase. Track the housing cycle and speak to experts to find out what the market is doing.

 

Missing the big financial picture

Having your finances in check is crucial to investing well. Getting a loan approved to buy an investment property is part of this but not the only consideration. Speak to a mortgage broker experienced in investment property who can provide advice. They’ll look at your financial position, discuss different loan options and help you decide how to best structure your mortgages.

 

Not treating it as a business

Understanding the difference between buying a home and an investment property is essential. While buying your own home is an emotional decision, an investment property is all about the numbers - such as price, rental returns and maintenance. Remember, this is a business and should be treated as such.

 

Thinking you can do it all

Failing to get professional advice before investing is a big mistake. Learn from those who are experts in their fields and can guide you through the process so you don’t make the same mistakes others have. All investors should have a trusted accountant, financial advisor mortgage broker, and possibly a property manager on their team.

 

To ensure your real estate dreams go to plan, you first need to have the information you need to avoid common mistakes. Getting the right location, timing, financial checks, approach and professional advice are all important to this. Whether you’re a first or third-time investor, these are key considerations to keep in mind.

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Topics: Investing
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