The Top 5 common complaints of the Property Investor
A quick guide to the top complaints of a property investor, so you can avoid making the same mistakes.
Like everything we do in life, when we look in the rear view mirror we can most often see the error in our ways. The way we express these lessons is usually to complain and think about what we could’ve done better, if we had our time again. While that might not benefit the person complaining, it is important that those starting out in property investment take heed of others complaints, to avoid falling into the same mistakes.
Here are the top 5 complaints we hear from property investors:
5. “I tried to do it by myself”
There are a lot of investors that treat property investment like a solo sport, not wishing to share their ‘plays’ with those around them. Many new investors feel like they have no one to talk to, or do not wish to talk about money with other investors, so they end up going it alone and falling into the obvious pitfalls.
Like any sport, the best participants have a coach and team behind them, and the same applies for property investment. If you want to get an optimal result you need to include enough experienced investors in your corner.
4. “I didn’t maximise my tax”
It is important to understand the best way to maximise your deductions, and no matter how good your accountant is, they are not specialists when it comes to the depreciation in your individual property.
If you really want to make the most of your deductions you will need to enlist the services of a quantity surveyor to visit your property and prepare a schedule to maximise the amount of depreciation you can get.
3. “I thought I was getting advice but they were just trying to sell me something”
When you’re starting out in property development you will hear the advice that you need to ‘speak to an expert’. Unfortunately not every expert is providing you with balanced advice, some are just trying to sell you the one solution they are offering.
If the advice you receive is focused around one strategy or idea then that is a sign of salesmanship. Mentoring should provide you with more holistic investment advice and provide different options rather than focus on delivering only one solution.
2. “Cash flow suddenly became an issue”
Having a rainy day fund is often the last thing on a budding investors mind when they are quite often drawn to spending their full budget on a more expensive investment. The problem with this is that life can be unpredictable and if your income does change, due to loss of a job or maternity or paternity leave, you will still need to maintain your cash flow.
For this reason it is important that investors have at least 6 months of savings for expenses set aside as a buffer. One or two years worth is preferred. An investment saavy mortgage broker should be able to advise you on what you should set aside, but don’t rely on this. The important thing is that you don’t push the limit on your lending and leave yourself and your family life vulnerable if your cash flow situation was to change.
1. “I chose the wrong property”
Asset selection is integral to providing a positive wealth outcome. Often first time investors, who try to make it alone buy properties in areas they believe have shown strong growth in the past. Unfortunately, if they are not well educated on the future growth areas, they may be investing in an area that will provide a lower capital growth than they are expecting.
Quite often in these cases they have overpaid for their properties, or approached the investment with the wrong strategy, for example not understanding the length of time they will need to hold the property to achieve the gains they are after.
There are always good, average and dud investments, and it can cause a lot of frustration when investors have picked the wrong property. If you meet an investor who has had a dud make sure you listen carefully and learn from their mistakes.