A common misconception is that property investing is easy.
In fact, many people falsely believe that they can buy any old piece of real estate, then sit back and watch their wealth grow.
In reality, successful property investment requires a number of skills as well as the right education.
Even when I started out investing I made mistakes along the way, but I learned from them and continued on my path to investment success.
So, to help you start out with a better chance of being a long-term property investor, here are five common mistakes that I’ve seen novice property investors make.
1. Not taking action
Some beginners neglect to take action because they’re still searching for that magical secret that is going to make it start raining deals but in my experience the real secret is plain old hard work!
Many other would-be investors are paralysed by too much “analysis” or even that their offer might actually be accepted.
Others give up too easily when they’re not successful in buying the first one or two properties that they submit offers on.
Whatever the reason, not taking consistent action is a sure way to fail at anything.
In the end, persistence is what leads to success and the more we persist, the closer we get to our dreams.
2. Having unrealistic expectations
In my experience, most novice real estate investors have unrealistic expectations.
Because they are inexperienced in property investing they just don’t understand the ins and outs of what’s required to purchase and then hold property over the long-term.
It may be about the amount of repairs a property needs, the time it takes to complete a project or the profit they should get from a deal.
Usually their expectations are either too high or too low.
They may think they’ll get more rent for their property than what’s achievable in the current market or they don’t keep money aside for vacancies or urgent repairs.
Experienced investors understand the importance of planning for the unexpected.
This way, when things don’t go as planned it’s not the end of the world and won’t break their bank balance or their property investment dreams.
3. Being impatient
One of the most important factors in property investment is time.
The longer you hold a property, the more capital growth you are likely to achieve and the more wealth you will be able to generate.
But it can take a while for novice investors to see positive results when starting out and many lose patience long before the real growth starts.
You can’t expect to immediately find deals and make money.
In fact, it may take a number month to even get your first deal.
It’s important to remember that it often takes many years for most businesses to get to a point where they make steady and reliable profits and property investing is no different.
4. Not concentrating on quality deals
This is one of the biggest mistakes I see novice investors make, especially after they have done a few deals.
After they have some success, they begin to focus too much on quantity instead of doing quality deals.
I’d rather own six quality properties that will achieve above average capital growth than 12 affordable properties that are unlikely to grow much at all.
For some reason, avoiding the temptation to focus on quantity is a principle that most investors have a hard time accepting, perhaps because their natural inclination is to do more.
Whatever the reason, novices must learn that investing is an activity in which “staying busy” is not always smart.
And in my experience, sometimes, the best deals are the ones you don’t do.
5. Being uneducated
Learning is such an important part of any success and this is especially true for property investment.
You always need to remember that real estate investment is like a business and you need to educate yourself continuously to have the best chance of long-term success.
It’s much easier and less costly to educate yourself than to make mistakes in the real world.
Some novices even complain that the books, courses or seminars promoted by real estate experts are too expensive.
I guess that depends on where you stand, but to me, they seem cheap compared to what I know can be earned and what I know you can lose in the real estate game.
Perhaps to a novice, though, they may seem expensive but as the saying goes, “If you think education is expensive, try ignorance.”
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.