Investing in property is one of the best ways to achieve financial freedom.
By purchasing a property and renting it out, investors can attain a source of passive income, and work towards their own idea of financial freedom. Statistics tell us, however; that most investors don’t actually make it past their second property, which limits their ability to achieve what they want.
By avoiding some of the typical mistakes made, investors can keep on the right track and build high performing portfolios.
The 5 most common mistakes would be investors make are:
1. ‘I can do it myself!’
It is an investor’s responsibility to gain knowledge about property investment, and become ‘financially fluent’. All successful property investors have built a great team around them, assisting them in all aspects of the purchasing process. You can’t just hand over all financial control to your accountant or financial broker. Rather, by surrounding yourself with a great team, and building a solid foundation of knowledge and understanding of the property market and investment, you will be more enabled to ask these advisors the right questions. At Calla Property we help you to create your very own ‘wealth creation team’ of trusted advisers whose primary focus is to ensure your success.
2. ‘If you fail to plan, you plan to fail’
There is much more to the decision of becoming a property investor, than just going ahead and purchasing a property. A well thought out strategy that considers your wealth-creation goals, as well as your financial situation; is crucial in property investment. Investors should map out where they want to be within the next five, ten, or even twenty years; and go further to construct a detailed plan of exactly how they plan to achieve these goals. You wouldn’t take off in your car, without knowing where you intend to go, and your plan of getting there; so, in the same way… PLAN!
3. ‘Who needs research?!’
Many investors still tend to make emotional purchases in locations that match their comfort zone. Emotions can drive the purchasing decision of owner-occupiers/ home-buyers, but should not influence that of those looking to create wealth through real estate. As an investor, there are essentially three reasons to decide on a property;
– the property fits into your investment strategy and goals
– the numbers ‘work’
– there is an upside potential.
4. ‘Reviewing your property portfolio’
When was the last time you checked the rental return on your properties? Or that your mortgage was the most competitive? Property is a long-term investment, but this does not mean that you should not be reviewing your property portfolio regularly. Remember that over the next few years, property values will fluctuate, and some will certainly perform better than others. By reviewing your portfolio regularly, you are able to ensure they are performing as well as they should. Furthermore, you can make decisions about how they fit into your financial strategy.
5. ‘Management of risk, can lead to reward’
Investors must understand the various risks associated with property investment. It is through understanding these risks, that investors can manage them sufficiently. Wise property investors will look into protection of their assets by purchasing property in the correct ownership structures, thus legally minimising tax, and protecting their assets. Most wealthy property investors own nothing in their own names, but elect to control their assets through companies or trusts.
If investing in property was easy, everybody would be successful at it. The struggles that investors can endure can be avoided through the power of education, planning and due diligence!
Whether you are a beginner at investing in property, or a seasoned, experienced investor, Calla Property can help you achieve your investment goals. We are research dependent investment property specialists and help you by minimising the risk of property investment in Australia. We do the research you don’t know how to do or don’t have time to do.
To find out more about property investment, and about how Calla Property can help you; contact us on 02 9016 2852