I am a huge believer that education is paramount to good investing. You will want to avoid all those costly mistakes. Investing in education is so important. Don’t be afraid to ask for help, or even pay for help. We can’t all be experts in every field.
Have a Strategy
A lack of careful thought and planning can cost you big time so make sure you have a strategy in place. First you need to know what your end goal is and what you are trying to achieve. From here you can formulate a strategy and then decide whether building a duplex, renovating a property, buying a blue chip for long term growth and so on will suit you.
Once you have decided on your property make sure you are buying for the right demographic. There is no point buying a 1 bedroom unit in an area where the demographic consists of families who live in 4 bedroom houses.
Learn the kind of people who are renting property in the area: how much are they paying and what types of properties do the like? Do they like newer homes or older homes? Is your intended purchase close to amenities, transport, hospitals, school catchment zones and universities etc.
What are the vacancy rates like? You should always aim for vacancy rates of less than 3%.
And do not get emotional about it. You won’t be living in it. An investment property needs to be about the numbers and how it will help you to reach your goals. Remember that property is just a vehicle to get us to where we want to be in the future.
You make your money when you buy, not just when you sell.
So don’t pay too much. Don’t be scared to make lower offers. You don’t know the position of the vendor so you could get lucky with a low offer. They may be after a quick sale and will therefore consider lower offers.
The worst that can happen is they decline your offer and come back with a counter offer and you can negotiate from there. Also think about offering good terms such as a shorter settlement period.
Alongside over-paying in the first place, another huge mistake that investors make is to underestimate how much their investment is going to cost them to manage.
It is very easy to downplay the amount of time and money it will take to get your property to the rental market. This can cause cash flow issues so understanding the true costs are very important.
You need to have a buffer
Things like property repairs, vacancies and rising interest rates can affect cash flow so we need to consider this when purchasing. I would recommend putting money into an offset account in case you need it later on.
Many people hope to save money by going through the process of finding a property and negotiation its purchase alone. I think this can be a costly mistake. Paying a buyers’ agent or a property mentor is a worthwhile expense. I would consider that as an investment. Education is an investment, not an expense.
If you are looking for a Buyers’ Agent to assist you with purchasing a home or investment property in the Sydney, Brisbane and Newcastle regions, please get in touch with Aus Property Professionals here or give us a call on 1800 146 837! We are Australia’s leading equity growth strategists.