Property Investing is a process of constant learning. In the industry, there is heaps to learn, and solutions are not set in stone. Ideas change as time goes on and market trends evolve. Many successful investors will attest that committing mistakes are all part of becoming a better property investor. And having an awareness of these mistakes will allow you to gain valuable lessons that you can apply to your next big investment decision. The world of property investment requires knowledge, patience, and a headstrong attitude. When you’re able to master all these and build up a strong portfolio, you’ll be able to achieve the financial independence you desire.
With all this in mind, we’ve rounded up 4 tried and tested rules you can’t afford to break when it comes to property investing.
A fundamental rule to becoming financially independent is to spend less than you earn and invest in growth assets. To become a good property investor, you should know how to manage your finances and start investing early. Successful wealth creation through property investments requires an actionable and realistic set of goals and a cohesive strategy to achieve it.
You need to understand all the costs involved when you enter the industry – the “price on the label” is often just the tip of the iceberg. It is essential to get professional advice on all the ins and outs of real estate investment to ensure you know what it financially entails to become a property investor.
A common misconception beginning property investors have is assuming buying old properties are more beneficial for the sole reason that they are cheap. Though some great-valued properties are indeed affordable, it’s best to know that you should not just stick to this as a sole strategy.
Purchasing the wrong property is one of the most significant investment blunders you can make. Don’t be blinded with the cheap price tag. You should be able to consider many different factors such as location, demographics, and investment strategies.
As a property investor, you must be able to diversify. Buying old real estate entails renovating run-down properties to get prices up. And you may get stuck with expensive renovations that won’t give you the return on investment you expected.
Buying off the plan properties is a great way to lock in a lower price for a brand new property. When you buy off the plan, you’re able to secure the purchase at below market value. And if the property market grows in value, your property increases in value too. This strategy is very beneficial as capital growth allows you to buy another property and continue to build your property portfolio.
You should know that when you get into the market of property investment, you don’t enter with the intention of selling. You focus on buying a property that will provide you with a steady and reliable income when you rent it out. Selling is generally a bad idea as the value of your money goes down. Selling is also a costly business. When you sell, you will incur more expenses such as capital gains tax and agent’s commissions. The only way to profit through your property is by selling it at a much higher price than you bought it for which is rarely the case.
Understanding the property market takes time, and dedication. Keeping yourself open to learning is always a great idea to any kind of business venture. As we said in the beginning, successful property investors didn’t start out as successful people with a know-it-all attitude. Becoming a great property investor is a culmination of experience, learning, and an open mind.
Beginning investors should understand that research, albeit necessary, is not enough. You have to gain a deep understanding of the investment fundamentals of the property market and gain valuable insight before you truly get a grasp of how the industry works.
To gain a professional perspective, A9 Property can supply you with the information you need. Our weekly real estate blog touches on industry trends, market shifts and investment strategy, providing you with valuable insight on your property purchase journey. We are experts who specialise in off the plan properties – a popular investment strategy in Brisbane and Australia. Check out our carefully selected portfolio of off-market properties for sale or contact us for an obligation-free chat to discuss the best strategy to start building your portfolio.