Risk is risk and the honest truth is, no one actually knows what the market is going to do because the market is made up of many people in different situations.
However, we can make calculated movements to minimize our risk.
But how do we do this?
Here are 6 property investment mistakes to avoid in 2022.
1 – Not knowing your budget
Knowing your numbers is a crucial part of becoming a property investor so if you don’t know your numbers and don’t have a budget, be prepared to fail before you’ve even started.
It goes without saying, but financial stress is one of the major causes of unhappiness so why not decrease your stress and take the time to really understand and know your numbers.
2 – Waiting for the right time
Ever heard of the property market cycle? If you have, you’re probably looking at it thinking “ I’ll wait for the right time during the cycle to buy” and as investors, we use this cycle to help us make decisions on when to buy in certain areas.
But a good property can be bought at any time during the property cycle. This cycle indicated how property values will trend, but even in a down market, if you hold it long enough, it will rise again.
As we say time and time again, it’s time in the market that counts, not timing the market.
3 – Not doing you due diligence
Never rely on anyone to know more about your investment, even us as experts. If you rely on others, you’ll never learn or understand yourself.
We believe knowledgeable action is power, and so we always help our clients become experts in investing and we guide them along the way.
4 – Not understanding demographics
It takes more than a nice looking home on a decent patch of land with nice fixtures to be a winning investment.
You need to understand the demographics of the area, especially population growth.
Studying demographics will show you what kind of homes people in a particular area want to live in which will help you as an investor know what kind of property to purchase.
5 – Buying based on emotion
Buying a home is an emotional decision but buying an investment property is a strategic decision.
There’s a clear difference between the 2 but we’ve often seen clients become too emotionally attached to the property, building it for their needs and not necessarily for the needs of would-be renters in the area.
6 – Ignoring depreciation
Understanding depreciation before you buy a property will determine what kind of property you buy. By ignoring depreciation, you’re missing out on one of the biggest benefits of buying an investment property.
Depreciation is closely tied to tax law and can change at any time so it helps having a team guide you through the process, so always ensure you get a depreciation schedule from a quantity surveyor once you purchase your property so you can maximize you tax benefits
Avoid these mistakes at all costs and you’ll save yourself a lot of pain and more importantly, money.