A single investment property won’t help you achieve financial freedom.
However, the majority of investors don’t make it beyond one property, and of the ones who do, only a tiny portion own six or more.
Why don’t investors own more properties?
Brett Warren joins me today to discuss the mistakes investors make that limit their options and their portfolios.
Listen to today’s podcast to learn how you can avoid these mistakes and instead learn to build a multi-million-dollar property portfolio.
12 Common Property Investor Mistakes
- Thinking of Property Investment as a Hobby – Property investment isn’t a way to fill your spare time. Instead, it’s a business. As with any business, you have to make a lot of decisions. Keep the big picture in mind rather than getting caught up in individual transactions.
- Failing to Strategize – Investing requires that you set realistic goals, both for the short and long term, periodically measure your progress toward your goals, identify both benefits and risks and find ways to maximize the former and minimize the latter. That takes a comprehensive strategy.
- Using the Wrong Strategy – Ineffective strategies like chasing cash flow or temporary property hot spots limit your options and restrict your ability to build wealth. Focus on proven capital growth strategies instead.
- Changing Your Strategy Unnecessarily –Property investment means playing the long game. Getting spooked by temporary fluctuations in the market instead of recognizing and riding out ordinary property cycles will disrupt your ability to grow your portfolio.
- Having Unrealistic Expectations – Property investment is a get-rich-slow process. You can’t expect overnight success. Be patient as you move through the stages of the property investment journey.
- Not Keeping a Rainy-Day Fund – Unexpected things happen, or things cost more than you expect. Keep emergency money handy to draw on so you don’t end up being forced to sell at a bad time due to needing quick cash.
- Too Much Confidence – Some confidence is good, but when you start thinking you can’t make a wrong decision, you’re in trouble. Be aware of when your capital growth is just the result of a rising market, not your own brilliance.
- Relying Too Much on the Media – Neverending news cycles are hard to ignore, but the purpose of the media is to get clicks and views, not give you good property advice. Be cautious about letting news stories inspire you to buy out of FOMO when you should be careful or be fearful of buying when you should be bold.
- Not Recognizing the Many Property Markets in Australia – There isn’t even one property market in each state. Property markets are separated by location, price, and type of dwelling, and each market will perform differently based on local considerations.
- Not Understanding the Importance of Location – We’ve all heard “location, location, location” many times, but are you tuning it out? Locational factors like population growth and the supply of new dwellings heavily impact capital growth.
- Not Knowing What Makes an Investment-Grade Property – Not every property is suitable for investment. Investment-grade properties appeal to owner-occupiers, are scarce in supply, have a high land-to-asset ratio, have unique or special features, have the potential to add value, and are attractive to banks.
- Not Using a Team – Educating yourself is essential, but so is knowing what you don’t know. There are professionals who understand more about the market than you possibly can, and you can surround yourself with a team of these experts to bolster your success.
Property investment is a process, not an event. It’s not about making the right decision just once or about “winging it”. You need a comprehensive strategy, a plan for contingencies, and advice from experts. Begin with the end in mind and create a plan that maps your course from where you are now to that endpoint.
Links and Resources:
Brett Warren – National Director Metropole Property Strategists
Get a bundle of eBooks and reports = www.PodcastBonus.com.au
Some of our favourite quotes from the show:
“If history repeats itself, and it will, my suggestion is those who get into property investment, about half will sell up over the first five years.” – Michael Yardney
“Buying a property isn’t a strategy.” – Michael Yardney
“There isn’t a one-size-fits-all plan, and we’re all playing different games.” – Michael Yardney
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