So we all know property investment is an easy way to make money, right?
So every day, the internet tells us that people become millionaires by investing in properties. They even try to sell you their books with their story and an identical way for you to make stacks of cash. Buying property and watching it increase in value has to be the easiest way to become fabulously rich. But it doesn’t always work out that way.
Investing in property is not a sure-fire winner every time. You don’t just buy a property and wait for your bank balance to bulge. Believe it or not, your choices determine whether a property investment is a winner or a loser – and you soon unintentionally follow down this path too. Investing in winners? You can earn a tidy sum. Investing in losers? Your funds will run drier than the Sahara. So something has to be done.
Here are the top 10 mistakes you’re probably making in the game of property investment – and also how to avoid them.
I’ve already said it – people think that buying properties is the cure to all their financial woes. Stop thinking like that. This just isn’t the case. Buying blind, no matter what the investment, is risky. You wouldn’t buy shares in a company without understanding them first, right? So what makes you think that property is any different? Oh, because of the fact that people on the internet tell you it’s the way to riches? Do NOT believe the hype. Take a step back to think about your investments and you will stand a much better chance of success. If you don’t want to do this then get the share prices in the newspaper and stick a pin in the page – it will be as successful as going in blind.
Once you buy a property then all the hard work is done, right? WRONG! Your property needs to be looked after constantly in order to protect your investment. Whether you buy to re-sell or rent, the property belongs to YOU. As your asset, you must make sure it is protected. You wouldn’t buy gold and then leave it in the back garden, would you? Inspect it regularly. Keep on top of the maintenance. Look after your pennies.
It’s easy to do. The market is heating up, prices are shooting away and you see a fast buck. But this can be the most dangerous market to invest in.
‘What goes up always comes down.’
Following a fast-rising market can end up with a loss on your hands when the market drops again. If you don’t know the market and are just following the crowd then you have no idea where the true market value is and how far it will fall. This is a precarious place to be. Yikes!
Number seven on the list of the top 10 mistakes you’re definitely making in property investment is usually number one when you are looking to actually buy a home. The location is vitally important and a great location makes the difference between a flyer and a dud.
Understand what location means to your investment – the rule of buying the worst house on the best street in town is one that has stood investors in good stead over the years – is it one that you are following? I think it’s about time you did.
In the UK property market, a handshake means pretty much nothing. The deal isn’t sealed until the paperwork is signed, witnessed, and keys firmly in your grasp. Don’t get ahead of yourself if you agree to a price on a property deal – you have only reached the start line. The finish is a long way in the distance.
Your seller can pull out any time up to the exchange of contracts so never count your chickens… You know the rest. Don’t arrange the builder to come in, don’t put the buildings insurance in place, in fact, don’t do a great deal at all until your solicitor confirms that it’s yours and you have a fresh set of keys in hand. Be careful, as you could be out of pocket.
The fifth mistake within the top 10 might look like an obvious one from the outset but it applies to everything you do.
You want quality professional advice –don’t just pay over the odds.
You want to invest quickly –don’t just pay over the odds for the first deal you see.
You want a builder to get your home on the market as soon as possible –don’t just pay over the odds for a quick turnaround.
This is a business and like every business, every penny counts.
Property investment is seen as a safe purchase. In fact, they say ‘as safe as houses’, don’t they? But that isn’t always the case. Buying any property carries risks –
Consider all the risk before you commit your cash. There are things that can go wrong. Don’t let these take over and scare you into walking away from a good deal but always think about how you can protect your investment.
How you feel in your new property is one of the makes or breaks of an investment. No matter if you’re buying it for yourself, a friend, family, or to rent out, if the house doesn’t feel like ‘home’ nobody will want to rent/live/stay in it. Buying a home to live in is all about the way it makes you feel. We pay a premium for a property that looks and feels fantastic because we want to spend time there and know that it will make us feel happy. That’s great for a family home or love nest! 😉
But as the investor, it’s all about the cold hard facts. If the numbers don’t stack up then walk away no matter how warm inside the property makes you feel.
I admit it – the word ‘homework’ has a bad rep. We hated it in school and couldn’t wait to burn our books when we left. But this is the type of homework that will make you money (as well as save your hard-earned cash for a rainy day, too). Needless to say, it’s well worth doing believe me. First check all the figures work, double check them, treble check them. This is your money that is being protected.
We’ve reached the number one in the countdown of the top 10 mistakes which means you’re definitely making in property investment and it’s the biggie. So many people think they can do this on their own. Investing in properties needs a raft of professionals –
Don’t scrimp and save a few pounds because you want to control costs – not using professionals will cost you far more in the long run. They are trained, qualified and do this every day of their working lives. Why wouldn’t you use them?