Is fear stopping you from investing in property?December 8 2016
Is fear holding you back from starting your investment portfolio? Too many would be investors let fear of the unknown prevent them from entering the property market. We interviewed the key people involved in property investment to better understand the fears of investing and how to overcome them.
The full video interview on this topic is available now exclusive to the WA Property Forum.
Why investing is important?
Most of the time in our lives, if something brings out our fears, we avoid doing it. So why is overcoming your fears in property investment important?
There are two ways in life that you can establish income. These are from working and from investing.
At some point in your life you are going to want to do a little less of the first, so in order to allow you to live life to the fullest and retire comfortably, you are going to want some investments behind you. Whether you sell them for immediate income, when you retire, or use the rental income as your primary income; the investments you have now will support your future financial security.
In today’s reality, where the retirement age is increasing and the unlikeliness of a pension being around to support those into their latter years is real; Is investing really optional?
The 3 biggest fears for an Investor
Fears for Property Investors will vary between people depending on their level of exposure to property investment, the environmental conditions, the sentiment of the market, family and friends, and their personal experiences with previous investment.
Following are the three most common fears of the new investor as explained in the video by Investor, Ian:
1. Building and or buying the right property in the correct market
Whether you are building new or buying an established investment property, this is one of the strongest fears that stop property investors before they really get started.
Nobody wants to buy a property that will cause them anxiety in the future, so the concern of choosing the right house, location and time can cripple some investor’s dreams permanently.
In terms of buying the right property, this simply comes down to research and partnering with the correct consultants to ensure you get a home that suits your potential tenant and a desirable location, with good amenities and transport services for your desired tenant. Read our article “Top 4 things to consider when investing in property” for more information on reducing fear on choosing the right investment.
When it comes to buying at the right time, the truth is that most won’t know for sure that it’s the right time to buy until it has already passed. Those in the know will be able to make educated decisions about the best time to buy, but even they will not know if they hit the “sweet spot” in the market until 6 – 12 months down the track. By the time a new Investor hears from the media that it’s the time to buy, the “penultimate” time has already past.
But does that matter? Ventura iD, Investment Consultant, Deanne Carter explains, “When you’re looking at property and holding it for the long term it really doesn’t matter if you buy it at the low or at the high… it tends to average out”
2. Investments might be left untenanted
Another significant fear of new property investors is what if your investment property is left vacant? This is a particular concern when Investors jump onto realestate sites and see the number of rentals available in the market.
This is a fear that can more easily be overcome rationally by making sure you do the groundwork up front. If you’re investment decision to buy the property considers the following, then the fear of the unknown should be decidedly reduced.
What to consider:
- When evaluating the competition in your area you need to think about – how is your property more attractive, will it be priced competitively, what are the benefits of my property over others available in to the same tenant? For example if you are building a new home in an older suburb full of wooden floors, plumbing with root damage and old appliances (most of us have experienced a rental like this at some point) then your brand new, modern property may be the breath of fresh air tenants are searching for.
- Partner with a Property Manager who has proven results in tenanting properties like yours.
- Factor in a vacancy period when you are doing your financial sums. Make sure you have the funds to support the home being empty for a couple of weeks, so it will not put unnecessary financial pressure on your home life.
3. Damage by tenants
New investors are quite often worried about the damage and maintenance required in keeping an investment property. If it is an established property investors commonly fear that possible maintenance issues could arise from owning an older home, which can become quite costly.
Investors who choose to build new are more concerned about the tenants damaging their new property and causing unneeded maintenance or reducing the appeal of the property for future tenants.
The fact is unless you are going to rent your property privately, which should bring along a lot more fears in itself, an expert Property Manager will handle all this for you. Their processes are set in place to ensure they screen tenants to avoid those who could possibly damage your property, and to deal with any maintenance or inspection issues that may arise during the tenancy.
Rentwest’s Lisa Cutri explains the maintenance process taken by her company to quell this fear for investors.
Why does fear stop Property Investors?
Ventura iD Investment Consultant, Deanne Carter explains, “Fear is a very strong emotion and it can hold people firm in their tracks without them taking any steps forward.”
The key is to work out what you are really afraid of and to conduct the research required to minimise the risk around that fear. No investment will be a ‘sure thing’ but what is certain is that investment provides an opportunity to supplement income and provide a foundation for enjoying life in your later years.
Deanne Carter discusses the fears that stop Property Investors in the video below.