Over the years we have spoken to a number of people who have tried to invest on the cheap, or made a decision based on their gut rather than the evidence and seen it all go horribly wrong.
At Lifestyle Property People we really do care about those people, and wish to support those who are looking to invest in property, so here are the five most important lessons we have learnt from our years of experience.
Emotions over logic
We have heard so many horror stories of investors purchasing a property because of a “gut feeling.”
Now…when buying your own home…it may well be that as soon as you walk into the property you have that ‘butterfly-in-your-stomach’ feeling and just know it’s right for you. However, when investing to turn a profit, you need to stay away from this emotional pull.
Instead, consider your investment objectives and ask whether your chosen property will help or hinder your goal.
Take some time to develop a comprehensive cash flow report and determine, through the use of data and evidence, whether it really is the right option for you.
Putting all your eggs in one basket
Often, we find new investors immediately look to properties in their area.
However, this might not necessarily be the best option for you. Instead, look to diversify your portfolio so that you are not at risk should anything happen in one market.
Owner managed properties
We often find that first-time landlords are simply overwhelmed by the sheer enormity of having to manage your own property. It’s an incredibly involved and challenging process, as you will need to vet tenants, make sure they pay properly and keep up with maintenance issues. Not only that, but you will also need to organise tradespeople, keep all the paperwork in order, make regular property inspections, frankly the list goes on and on.
This can be a huge amount of work and whilst you may think you could save money this has rarely been our experience. Employing a qualified and reliable property manager is always a good idea and can help make your investment so much smoother.
This point is along the same lines as the above but is well worth reiterating. When investing in property there really is no room for shoe-string budgets or being “lean,” whatever on earth that means. You really must invest the funds in hiring a qualified lawyer, recommended builders, reliable accountants etc…Trust us, when investing in property, cutting costs in the short term will lead to long-term pain.
5. Tax Structure preparation
The tax structure that goes alongside buying a home can be extremely complex and there are a number of possible deductions, particularly for those investing in property, that it’s hard not to make a few errors. Make sure to hire a professional accountant who has a deep understanding of tax law and is able to offer expert and helpful advice.