| Mistakes all property investors must avoid Close to half of those who get into real estate sell up in the first 5 years, and of those still in the game, most never get past their second investment property. The problem is that if you don't have a strategy it's simple to get distracted by all of the "opportunities" that keep cropping up. Unfortunately many of these don't work out as expected. Look at all the investors who bought off the plan or in the so-called next "hot spot", only to see the the importance of their properties underperform. 3. Not reviewing their property portfolio While property is a long-term investment and the costs of buying and selling real estate are considerable, that doesn't mean you should fall into the trap of not reviewing your house portfolio. Of course you can't easily "swap" properties or reweight you property portfolio like you would shares. But you should still regularly review your home investment portfolio to see what you can do to improve or upgrade it's performance. Another way sophisticated property investors secure their assets is to buy them in the correct ownership structures that protect their assets and legally minimize their tax. Most wealthy property investors own nothing in their own names, but control their assets through companies or trusts. Not having a plan Most of us spend more time planning our holidays than we do planning their financial future. If you don't have an investment plan, how can you hope to develop financial independence? Most Australians fall into 4 categories: a. They don't invest at all The majority of Australians fall into this group - they just haven't taken action yet. They invest too much. Some people invest too much - yes that's possible! They have taken unnecessary risks and borrowed too much. As Australia moves through the next stage of the property cycle, there will be tremendous opportunities for investors to build a substantial property portfolio and gain financial independence. The cycle is giving us a gift at the moment. Not too much. They invest the right amount -sounds a bit like Goldy Locks doesn't it? For them every property purchase is part of a thought-out wealth creation plan. 1. Buying the wrong property To achieve financial freedom through property investment you'll need to accumulate a large asset base. b. They don't invest enough Others have bought a house and understand the power of appreciating real estate, but they want to pay it off before they invest in more real estate. With increased market uncertainty and less demand from buyers, many properties are "on special. When was the last time you checked to make sure you were getting the best rents or that your mortgage was appropriate for the current times? Maybe it's time to refinance against your increased equity and use the funds to give you a buffer for the uncertain times ahead or maybe to buy further properties? And sometimes it is appropriate to take into consideration selling an under-performing property to help you to buy a better investment. Of course the alternative is to buy properties based on research and which further your wealth creation plans. 2. Then there are those who invest just the right amount. Not too little. This means owning the right properties – ones that grow strongly in value and outperform the averages, so you can borrow against your increased equity and fund further property purchases. However, each time you ask many investors why they purchased their home they'll say things like: it was close to where they live, where they holiday or where they want to retire. These are all emotional reasons for buying property, and while possibly a good way to buy your property; they are not the right way to buy an investment property. " Let's make sure we learnt the lessons from the past to help you us secure our future. To help you succeed in your investment endeavors, here are four common mistakes property investors make and how you can avoid them. |
Wednesday, 7 March 2012
Mistakes all property investors must avoid
