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The Top 10 Property Investment Mistakes

The Top 10 Property Investment Mistakes

There is no doubt that, when pursued sensibly, property and real estate investment can be an excellent money spinner for investors. In order to avoid common pitfalls, however, make sure that you don’t fall into any of the following ten categories.

Lack of Experience

Property investment isn’t easy. Despite the spate of TV shows which make turning around a property look like a breeze, experience is vital. If you don’t have it yourself, make sure that you at least have a mentor who knows exactly what they are doing.

Lack of Research

Even if you have general experience of property investment, you need to have done your research into the locality. Do you know about major projects and controversies near your property, which may affect its value. If not, make sure you get up to speed before investing.

Lack of Planning

Don’t just buy the first property that catches your eye. Go in to the property investment arena with a plan, and make sure that you stick to it. This is about getting the best return for your investment, not random property purchases.

Lack of Objectivity

Even worse than the lack of a plan is the inability to divorce yourself from your own personal likes and dislikes. You are unlikely ever to live in an investment property, so don’t let your judgment about its look and feel influence your decision. Go for the best financial return.

Lack of Funds

Going for the best financial return means not over-exposing yourself to risk. If you only have limited funds, then start small and build up your investment portfolio. Don’t put yourself too far in debt to financial institutions, as the property market can always change, and not always for the better!

Lack of Financial Expertise

If you have experience of the property market but lack a head for numbers, make sure you invest in a decent accountant, or at least seek the advice of a friend with a good head for figures. A single mistake in weighing up the income and expenses of your investment can make it worthless.

Lack of Patience

The best property might not come onto the market straight away, and sometimes those that do are ‘slow burners’, rather than immediate investment successes. Don’t expect to become a millionaire overnight. Your aim should be to outcompete the market in the long term, not in the first couple of months.

Lack of Due Diligence

Always perform due diligence on the property you are buying before committing your money. If it looks too good to be true, make absolutely sure that it isn’t. You should already have done your research on the locality (see above), but make sure you are also confident about the property itself.

Lack of Support

Property investment can be stressful, and sometimes you might feel that things aren’t going the way you wanted. At this point, a mentor or sympathetic friend can provide exactly the different perspective that you need to get things back on track.

Lack of an Exit Strategy

Don’t make property investment the only pillar of your financial strategy, and don’t over extend yourself. If the market collapses, or your property turns out to be unsuitable, leave yourself enough to get by financially, and live to fight another day!

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