Please use the menu below to navigate to any article section:
There’s a reason they call property investing “as safe as houses”, right?
It’s because generally, buying property – provided you have a clear strategy and set goals – is a sound investment.
Becoming a landlord can be a highly profitable venture for many people, including everyday Australians earning ordinary incomes.
However, there are a few harsh truths about property investing that newcomers might want to know before they put their money on the line.
1. It takes work
Sometimes, it takes a lot of work.
Property investing isn’t a hobby you can pick up on the weekends.
I’ve seen plenty of new investors become absolutely gobsmacked at the level of work, research, and effort that goes into creating and executing a successful investing strategy.
To really get to know the market, and to research the various strategies you can use to get ahead as an investor, you will definitely need to set aside dedicated chunks of time to work on your investments.
This might include things like refining your strategy or approach; networking and expanding your contacts; researching new streams of income, such as Airbnb; liaising with agents and property manager’s when you’re actively buying, selling, or renting; and always learning new techniques and strategies.
2. There’s a big, big learning curve
For any newcomer, property investing can seem overwhelming at the beginning.
The sheer amount of information you need to get your head around can make even the most enthusiastic investor become gun-shy – or worse, suffer from analysis paralysis.
This is when an investor becomes so committed to “researching the market”, it’s all they ever do… without ever taking any action.
If you’re new to the real estate game, don’t be alarmed by the seemingly endless amount of materials, resources, and content you’ll come across.
Instead of focusing on what you don’t know, focus on what you will know.
Remember: every experienced property investor started out as a beginner, in the exact same place as you.
And if they can become successful and learn every trick of the trade, there’s no reason why you can’t either.
If you’re really struggling to educate yourself and uncover the right way to invest, then collaborating with an experienced investment advisor might be the ideal path forward.
3. It’s not a ‘get rich quick’ scheme
Property investing, even when timed absolutely perfectly right, takes time.
And I’m not just talking about a year or two; I’m talking upwards of 10 years.
During a boom, you might make a strong profit in as little as a year or two.
But if truly you want to see strong, lasting results, you’ve got to be in it for the long haul.
Property is a smart way to do something now, which will create wealth later.
Any newbie investor with a mindset that fails to respect the longevity of property, will find themselves out of the game faster than they can say “plenty of off-street parking”.
4. It costs money to get started
There’s a large amount of cash involved in property investing.
When you’re saving up for a deposit on your first property, you might find yourself wondering whether it’s really worth the upfront costs.
Now, you could do it quite cheaply, by investing in remote, regional towns, where a small deposit and lower entry costs are on the table.
But realistically, you likely won’t find success that way.
Why? Because there is a big difference between a cheap property and an investment-grade property.
As with many things in life, when you buy an inferior product, you will generally get inferior results. You can’t buy a cheap and cheerful property and then hope it will magically result in superior profit.
Instead, focus on saving as much as you can, so you can put those increased funds towards an even better quality property.
Keep in mind the additional costs of investing on top of the deposit, such as building and pest inspections, conveyancing and legal costs, real estate agent expenses, stamp duty, and other fees.
So, only one question remains; are you put off yet?!
Real estate is a fantastic investment vehicle and one that can help everyday Australians build long and lasting wealth.
As long as you have a solid plan in place, some clear goals, and a reliable support team around you, investing can be every bit as enjoyable as you’d hoped.
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.