Common Property Investment Mistakes To Avoid
Property investment is something that a lot of people consider. The returns on this type of investment can be great, if you do everything correctly. The problem is that there are a lot of common mistakes that people make which lower the returns they get.
Letting Emotions Take Over
When you buy a property you are going to live in, it is fine to allow your emotions some say in the decision. However, when you buy an investment property, you cannot allow this. The property is an asset that you are getting and not something that you should be emotionally tied to.
When viewing houses for your investment, you need to stick to the facts. Your budget and end goals are what you need to focus on and not any other emotion. You do not allow your emotions to take control when you choose a fixed-deposit and you should not allow them to when you buy an investment property.
Having No Long-Term Strategy
Property investment is generally considered a long-term investment unless you are looking at flipping your properties. With this being the case, you will need to have a long-term strategy in mind when you start. It is recommended that you map out what your plan is before you start looking at your first property.
If you are looking to live off the profit from your property investment, you need to know how much you need to make each month. You will then have to determine the number of properties required to meet this. Without a long-term strategy, you are going to flounder and it is unlikely that you will make the ROI that you want or need.
Not Keeping Enough Equity
A lot of property investors will want to put as little of their own money into the property as possible. While this can be a good idea when the interest rates are low, there are some issues that you have to be aware of. If you have a high mortgage, you could run into problems during void rental periods.
At a look at your occupancy rates and you will find that 100% occupancy is very rare. If you have a 70% occupancy, you need equity to cover your mortgage payments for the void times. If you have a high mortgage, you could find yourself in financial difficulty during these times.
There are many common mistakes that people make when it comes to property investment. Many of these mistakes can be avoided if you take your time and complete all of your due diligence.