Are you planning to invest in property? It’s a good idea, but you cannot negate the challenges. Many new buyers jump into the market without being conscious of common pitfalls and lose their money.
No one wants to be stuck with a bad deal, do you? Of course, no! Let’s reveal the common mistakes that you may make and find out their solution.
1. Not Having a Clear Plan
One very regular mistake any new investor would face would be not having a clear strategy. Driving without a map could easily be described as entering into an investment in a property without any clear plan.
You might get somewhere, but it is probably not where you intended to be. You’ll have to think long-term. So ask yourself: What’s the purpose of this investment? Will you rent, flip, or hold onto the property for future value? Ensure that what you are buying aligns with your financial goals.
2. Not Proper Researching
Would you buy a car without looking under the hood or checking reviews? Of course not! However, most property investors are not taking similar precautions. Location is the make or break of your success in property.
You should research more than just the location, you need to know the area in which it is. Is there a construction site planned next to you? Does your area tend to get flooded or have other problems? And if you’re renting, think about who those renters are going to be, their needs, and what they’re looking for in a house.
3. Doing It All Yourself
You may think you have everything together, but property investment can be complex. That’s why you need to seek the services of investment property agents or an investment property agency.
They know the market and will take you through the process of buying. Be sure to surround yourself with experts, like a real estate agent, lawyer, or inspector. It can save you from making a costly mistake. So trust them and their advice.
4. Neglecting Local Market Trends
The property market in Australia is not homogeneous. What would work in one city might work nothing in another. For instance, in the June quarter of 2024, the mean price of residential dwellings in New South Wales was the highest in Australia at $1,222,000, followed by the Australian Capital Territory ($953,900) and Victoria ($900,300). On the other hand, the Northern Territory had the lowest mean price at $538,000.
Understanding these price differences is crucial, as what works in one area may not apply in another.
Probably the most common mistake here is to ignore the local trends. Knowing the supply, demand, and prices within the area of interest is important. Always do your homework concerning the local market before leaping headlong into something.
5. Paying too much for a real estate property
It’s easy to get swept up in a frenzied bidding war when the market is competitive. But one of the biggest mistakes you can make is overpaying. It is very easy to go too high on your bid on a property only to regret it later with financial stress at the house, especially if it does not generate income as you had hoped.
However, before you make that offer, you can do plenty of research on the recent sales of comparable homes in that neighborhood.
6. Mistaking the Cost of Operations
It’s not only the cost of buying a property but the associated cost of owning it too. These costs include:
- Maintenance
- Repair
- Insurance
- property taxes
For example, if you are renting this out, what is going to happen when it becomes vacant for several months? Will you be able to cover all the expenses? Always factor these in and budget for them when making your investment.
7. Neglecting Financing Options
Probably, the thorniest part of property investment is finance. Some homebuyers are tempted by an irresistible low rate or exotic mortgage product and get hit in the pocket months later.
If you’re looking at an adjustable-rate mortgage, then forget about a smooth payment process someday. You should go for a fixed-rate mortgage instead, so you can have an estimate of your payments. Always ensure that you can truly afford to pay your mortgage at any given time.
8. Not Thinking About the Needs of Tenants
If you’re going to invest in a rental, then you have to think about your future tenants. To whom will they likely belong? Young professionals? Families? Students? All these categories have different needs and expectations from their accommodation.
For example, families will prefer suitable schools and low crime rates around the locality, whereas singles may prefer proximity to nightlife or public transport. Tailoring your property to the right tenant makes all the difference in finding renters fast and keeping them long-term.
Citadel | Investment property agency with the best buyer agents in Australia
The best thing that you can do is to take the services of buyer agents. Citadel is the best buyer agent in Australia that provides extensive services in property investment. We guide you to the ideal home or investment property. With our local markets in Sydney, Brisbane, and Melbourne we take your steps towards the best deal.
What sets us apart?
- We learn what’s happening in the marketplace from data-driven sources.
- We streamline the purchase process by putting you in front of some industry key players.
We offer pre-sales advice and property management services that lower the stress of property buying for you. Trust Citadel on this journey, and we shall guide you to your investment goals.
Final Note
The fact that property investments can be such a great way to make an excellent wealth-building investment, however, creates a catastrophe if done wrong.
Some of these pitfalls include failure to plan, forgetting running costs, and several more, whereby all this might make a great investment turn into a headache.
You can avoid all this by doing the research you need and getting expert advice from investment property agencies like Citadel in Australia.