8 Mistakes Made By Young Property Investors


Have you considered getting involved in property investment even though you’re still relatively young? young-couple-dream-home-first-buyer-300x164

Want to avoid the minefield that causes around 50% of those who get started in property investment to sell up?

Finder.com.au interviewed me for my thoughts on this topic and one of the things we discussed were the many mistakes made by young investors.

Here are 8 of the common mistakes I see them make:

1. Lack of research and knowledge

Knowing how to find a good investment location and property type are valuable skills to have, but young people often fail to research, which can lead to poor investment choices. 

In Australia, there’s around 1.8 million property investors and more than 90% of them never get past their first property.

92% never get past their second property.

Only 15,400 own six properties or more.

In other words, most property investors fail.

So you’ve got to be careful about who you listen to and the strategies you use.

If you go for cash flow, you may miss out on long-term capital growth.

2. Property investing is for cashed-up baby boomers

This is a common misconception that deters young people from investing in property.

While completing a deposit may be more of a challenge for a young person compared to someone at the peak of their career, there are many competitive home loans that are suitable for young investors.

3. Not thinking long-term

Many young people buy property without thinking about their future needs.

As a result, they often buy properties that don’t accommodate for change.

For instance, although a small, one-bedroom apartment may complement your budget and lifestyle now, what happens if you want to have kids in the next five years?

4. Buying only based on pricehouse fall price

Many young people are preoccupied with buying a property that’s ‘cheap’ and use this criteria alone to guide their decision making.

However, price should only form part of the investment choice.

You must also consider a range of factors such as the location (does the suburb have growth potential?) and the market (is there positive buyer sentiment?).

5. Not saving early

As a young person, your strongest asset is time.

By getting into property investing from a young age, you gain the ability to leverage the market and build your savings over a longer period of time.

Try to get into a habit of saving by making regular deposits into a savings or transaction account, or follow a budget to boost your savings.

6. Buying emotionally

Many young investors are swayed by emotion and convenience when making purchasing decisions.stress emotion buying house

A big mistake they make is not having a strategy and buying emotionally.

They tend to buy closer to where they live, close to where they want to holiday, close to where they want to retire.

But sometimes it makes sense for people to buy interstate.

You’re going to have a property manager anyway, so whether the property manager is in Sydney, Brisbane or Melbourne, it doesn’t matter.

7. Not reviewing property portfolio

All investors should get into a habit of continually reviewing their property portfolio.

They should annually review their portfolio and see how it works.

This is your employee, this is your property investment business.

If it’s not working, you’ve got to look to improve it. Can you swap property managers? Can you do it up?

8. Buying for cash flow

Many young investors make the mistake of buying for short-term cash flow rather than capital growth.economy property market grow wealth house dream first home

They think they need a bit of cash flow because they haven’t saved a deposit, but the problem is that you can never become wealthy with a small amount of cash flow.

In Australia, there are two motives for property investment: buying for cash flow or buying for capital growth.

Capital growth properties are slightly negatively geared, so you need more financial discipline, but the only way you save for the next deposit is through capital growth.

It’s too hard to save for your subsequent deposit, so while the majority of Australians look for cash flow, the wealthy ones invest for capital growth.

Read the full article at Finder.com.au: How to invest in property at a young age.

You may also want to read: 3 Good Reasons To Start Investing At A Young Age

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

If you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with direction, guidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more Metropole
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

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