Investing in property is a proven way for Australians to build your financial nest egg.
But if you’re apprehensive at the thought of taking that leap and borrowing six-figures (or more) to invest in property, you’re not alone.
Here are six of the most common fears that trick people into not investing:
1. Fear or failure
If you don’t have previous experience, it’s easy to feel like investing is something you’ll never be able to achieve, and it’s true it can invite some potential disasters.
Loss in property value, inability to keep up with maintenance, the prospect of terrible tenants, and all the stress that comes with owning a property is enough to deter even the most savvy of would-be landlords.
But by having a “rainy day” financial buffer, researching your properly carefully before you decide and by getting a team of independent and unbiased advisers around you, you’ll minimise the risks for potential failure – and maximise your chances of success.
2. Fear of being swindled
The property market can be rife with mixed information, which makes it easy to feel distrustful of those who “appear” to be there to help.
Many so called “advisers” have a vested interest, while real estate agents represent the vendor and project marketers…well enough said!
Healthy scepticism can actually be valuable, because it allows you to think twice before diving into what could potentially be a poor choice.
Trust your instincts, and if it doesn’t feel right, don’t do it.
But don’t let your fear of losing money prevent you from investing at all – because if you don’t buy any assets, you’ll never grow your wealth.
3. Fear of being inexperienced or unintelligent
Investing can seem so overwhelming that it might feel easier to avoid it all together.
But the truth is, if you approach it with an open mind, anyone can understand it.
There are many sources, from books and magazines to online blogs, which can help you to build your knowledge before investing.
What’s more, you don’t need to understand every single aspect of it to make an effective choice.
And if it’s still too much, you can enlist the help of a professional, like a property strategist, to make the process easier and give you the best chance of choosing a quality properly and making wise investment decisions.
4. Fear of fudging the numbers
Investing involves numbers, and lots of them.
If maths isn’t your strong point, you might shudder to think that in order to invest properly in property, you must have at least a basic idea of mathematics.
You need to be able to estimate a property’s potential cash flow by calculating aspects such as the expected rental income, necessary repairs and maintenance, insurance, taxes, and payment for any expert advice you’ve received along the way.
But never fear: if all of this falls into your ‘too hard basket’, you can always work with trusted accountants and advisors to guide you on your way.
5. Fear of going broke
Put simply, investing in property means taking a risk that you could lose money.
It’s a fact, and the outcome of your investment cannot be predicted with complete accuracy.
Suburbs rise and fall in popularity; future developments in the area can make a property less desirable to tenants; a property can decline in value due to a number of reasons; and the economy is forever fluctuating.
The risk of losing money is an unavoidable reality of investing, but it is a low-risk, and one you can combat by choosing your investment wisely, and buying an investment garde property in a location that is likley to outperform the averages becuase of its local demographics.
6. Fear of making the wrong choice
No one wants to part with a large amount of money to end up with a poor result, which is exactly what can happen if the property isn’t chosen carefully.
So how do you make the right choice among so many options?
Do your research beforehand to gauge what types of properties are likely to be in continuous strong demand in the future by a wide demographic who can afford to and will be prepared to pay a premium to live in that area.
Proximity to lifestyle factors like the CBD, parks, schools, shopping centres and public transport will always be more appealing to tenants and are important factors to consider when looking to invest.
Ultimately, we all face similar fears when it comes to investing in property – and in fact, it would be unusual if we didn’t have fears of some sort.
The key to moving past your fears is to do what you can to mitigate them, so they don’t stand in your way and prevent you from building your wealth through property.
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