Investing in property can bring fantastic rewards but, as with all investing it is not without risks. Many of those risks however, can be reduced significantly by avoiding the five most common mistakes made by first-time investors.
So, what are the key things we recommend any first-time investor watches out for?
- Don’t jump in without getting professional help:Unlike many other forms of investment, property ventures involve a large financial outlay to purchase a single asset. And while property has traditionally been one of the most fruitful investments over time, there are many, many variables to be taken into account in order to maximise the returns. Naturally, your own research is important, but there will also be a lot of unknowns that can only be uncovered by using the knowledge and experience of a property specialist.Getting professional help early on in your property investment journey may not only save you a lot of time and stress, but may also save you thousands – or better still, actually improve your position.The team at WhiteStar Group for instance, can provide you with valuable help which may include where, when and how to invest wisely in property, and also be on hand to guide you through the process – one that can often be difficult to navigate for the first-time buyer.
What’s more, when you’ve secured your ideal investment property, our in-house property management team can help find quality tenants, so you can start earning a reliable income from it, as soon as possible. It’s what makes us one of Victoria’s most trusted all-in-one solutions for those new to investing in real estate.
- Don’t choose the wrong financial structure:If you’ve already begun looking into property investing, you’ve probably realised that finance and borrowing can be a minefield of different fees, conditions, packages, exclusions, borrowing decisions and calculations.It’s no wonder that many new investors make costly mistakes in setting up their finances before they’ve even found their property. This could be due to over-borrowing, miscalculating fees and stamp duty, or even discovering that they’re required to start paying off their mortgage while the home is still being built.Again, the experts at Whitestar can help by making you aware of various factors that can affect your borrowing power and how to make it more affordable.
- Avoid choosing the wrong property:It’s hard enough finding a property that you want to live in yourself, but selecting an investment property opens up a host of additional dilemmas. As well as deciding between a new or existing home, you’ll want to find out where the rental growth areas are. What kind of home is most sought after (both now and in the foreseeable future)? What actual returns you can expect after rates and other fees are taken into account? Which areas hold more potential: inner city, the suburbs or regional centres?Your WhiteStar property consultant can help answer these queries and point you in the right direction based on current and forecast trends but also by taking into account your actual affordability. Getting into the property investment market can be done with less financial contributions than you think. On top of that, we also offer exceptional turn-key options with all costs presented up front, so you know exactly what to budget for – then simply turn the key and move in, or start collecting rental income.
- Don’t let emotions guide your choices:This can be a lot harder than many people imagine. But when buying real estate, especially an investment property, it is vital to be as objective as possible. Comfort, familiarity and personal connection often lead people to focus on areas they grew up in, have an association with, or have always aspired to live in. They may want the cache of a blue-chip address or have had their views coloured by the opinions of their friends and family.You need to remember though… it’s your savings that are being invested and unless you intend to live in the property yourself, the only opinions you really should consider are those of the rental market, and an impartial property advisor.Take the emotion out of choosing your investment property, and you are much more likely to make a smart, profitable and rewarding decision in the long run.
- Don’t enter the market with only a short-term plan or goal:If you want to make a quick buck, then property investment is probably not for you. The most successful real estate portfolios are held by those who are willing to play the long game. Those investors understand the fluctuations in the market – both in capital and in rental returns – and are prepared to resist the urge to chase a quick return.By having a long-term plan, you’re in a better position to ride out any low-growth periods or vacant tenancies, while also being ready to seize an opportunity to use the equity in your property to help grow your investments.A long-term plan however doesn’t necessarily mean holding onto the same assets for years. It could be a continually evolving plan to steadily and sustainably improve or expand your portfolio by leveraging off the home or homes you own. And while it may sound complex, with the right advice and guidance from a WhiteStar specialist, even a first-time investor can develop a sound long-term plan that not only gets them off to a good start but also sets them up with a solid road map for property portfolio growth.