Investing in property is exciting, especially for new investors. However, like every financial venture, it’s good to know what to avoid as well as what you need to consider.

Here are some typical mistakes real estate investors make.

1. Approaching only one financial provider

Every property investment journey starts with financing, and it is imperative you get this right. When it comes to raising finance, look at a range of providers and consider all potential options, weighing up the risks and the benefits.

As well as speaking to your bank, find a good broker who has access to other legitimate finance providers; they may well be able to broker you a better deal than if you go direct.

2. Over stretching the budget

A common mistake first-time investors’ make is not factoring in all buying costs, which may include land tax as well as the usual stamp duty, conveyancing fees, searches and inspections.

Running the property also comes with expenses. On top of the mortgage payments you also have to pay costs associated with renting out the property (eg marketing costs), your council rates, insurance and other fees along the way. The plus is these are often tax deductible.

Try to avoid really stretching yourself financially, and allowing some sort of a buffer in your budget. Other costs you hadn’t thought of for example may include marketing the property to tenants and time when the property may be vacant between tenants.

3. Not claiming all eligible tax deductions

One thing you can be sure of is ATO wanting a share of your profit! Do your research and speak to a trusted financial specialist so you understand what you can and can’t claim for, and how your tax may be affected as a result.

One very under-rated tax deduction is depreciation. While you do need a specialist to calculate depreciation, the tax deduction associated with it could potentially be one of the biggest claimable deduction for some.

4. Too much emotional attachment

It’s really easy to slip in to imagining yourself living in a property, and then being swayed into paying too much or buying a property which isn’t going to make you money.

Keep your business head on and save the nostalgic reminders and beautiful gardens for the property you want to live in, not for the one that’s going to help you live your financial dreams.

5. Skimping on the neighbourhood research

While prospective tenants will look for different things in locations (eg families will look at what schools are in the area), one thing all tenants want to be is to be safe. When you are looking at suburbs it is worth visiting them at different times of the day and/or night, to get a real feel for the type of tenants you are likely to attract.

Generally, a good investment property will be close to amenities, offer lifestyle choices and will be well served by public transport.

6. An inflexible approach

Don’t have your mind set on a particular type of property or neighbourhood. Consider a property on its merits – a 2 bedroom house a couple of suburbs along may offer a better return of investment both in terms of capital gain and income than a studio apartment in a prime location.

7. Impatience

Just because a property is right for your budget, it doesn’t mean to say it is a good investment. Hold out for the one which is ticking the other the boxes too, such as size, location and liveability.

Get in touch to learn more. Our experienced team loves to talk and share its knowledge! Give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat.