Investing in property is probably one of the most straightforward ways for wealth creation.

Whether you’re new to property, or a seasoned investor, it’s always good to review some basics, and avoid making these 10 mistakes.

#1 Rushing into it

While property is one of the most straightforward ways to invest, it isn’t something you can rush into, you do need to take the time researching into how it works, what you need to consider, and to plan your property/wealth creation strategy.

#2 Having the wrong mindset

A common mistake made by those who are new to property investment is they think like a homeowner, not like an investor; and they allow their personal tastes to get in the way of what makes a good investment.

Property investors keep their emotions out of their buying – after all, they aren’t going to live in the property. They are mindful of their budget, and they focus on what makes a property desirable to a range of tenants, looking at the location, amenities and lifestyle choices.

Take a look at our blog about what tenants look for in a property.

#3 Waiting for the perfect property

No property is perfect. The key to deciding on whether to put in an offer is whether it ticks the most boxes of what makes a good investment property for your budget. If it doesn’t tick enough boxes, don’t put an offer in and move onto the next.

#4 Paying too much

Some people are so desperate to be a property investor, they let this mar their judgement. When you put your offer in, be sure of your upper limit; if negotiations end up going upwards, don’t go above it and know when to walk away.

No-one likes to feel like they’ve paid too much for something; the last thing you want is to not receive the return on investment you expected because you paid too much.

#5 Underestimating running costs

This is always a tricky one, but make sure you do factor in everything. The main ones include strata fees, water, agent fees, council rates, and annual safety checks (eg smoke alarms). But there may be others such as gardening. And of course, you will need to budget for any maintenance such as blocked drains.

#6 Borrowing to the limit

The rent needs to cover your costs; if borrowing to the limit means your costs aren’t covered, then you will need to be finding extra for running and unexpected costs.

#7 Not having a reserve

You do need to have a financial reserve for property repairs, vacancies, and rising interest rates. Buying the right property, eg one which is low maintenance and is appealing to a wide range of potential tenants, will mitigate these risks.

#8 Being a bad landlord

If you’ve ever been a tenant, you know there are good landlords but there are bad landlords. Being a good landlord isn’t actually that hard, particularly if you use an agent to guide you through the process.

The biggest complaint about landlords from tenants is maintenance. Legally the property must be safe to live in, so the property must meet safety gas and electrical standards. Maintenance issues, such as blocked drains and faulty white goods, should be repaired promptly and professionally; a botch job will cost you in the long run.

#9 Not having a quality landlord insurance

All too often we see landlords taking out an insurance policy because it was cheaper, but in the event of them putting in a claim, it turns out they aren’t covered. We recommend you use a specialist landlord insurer and don’t be tempted by potentially cheaper, but often less than adequate cover, mainstream options.

#10 Not using a professional property manager

It is possible to self-manage your property, but it does take time and effort, and if you don’t know your legalities, it can be costly. Read our blog on what makes an excellent property manager.

If you are thinking about getting into property investment, or you already have a property, Find out more about our property management services – give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or call into our Cardiff office.

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