Property has fast become the commodity of choice for many Aussie investors, and for good reason. For starters, housing has historically proven to be one of the most stable and reliable of all investment vehicles.
Then of course there are the benefits of holding income producing property assets within an SMSF structure and the current ‘perfect real estate storm’ of low ongoing interest rates and in many instances, attractive rental yields; making the accumulation of long term capital growth, as well as short term cashflow for portfolio sustainability, a very real prospect.
That’s not to say however, that you can simply purchase anything and expect to achieve sufficient wealth with which to retire…far from it.
In fact, when tidings are positive for our property markets it’s even more crucial that you establish a well-conceived plan of attack and follow tried and tested investment lore.
Mistakes are often made when investors succumb to complacency due to market buoyancy, with many throwing caution to the wind and speculating, rather than investing strategically in these generally forgiving periods of the property cycle.
Irrespective of what’s occurring around them, successful investors – the ones who make it all the way to the top of the property ladder and realise their ambitions – have a list of do’s and don’ts.
To realise your own objectives, avoid these thirteen things that successful investors never do…
- Go nowhere fast
Setting actionable and achievable goals is critical if you hope to create a viable property investment portfolio. If you start out on your journey without any idea as to the destination you’re trying to reach, how can you possibly hope to make positive progress?
- Fail to plan
Once you’ve established measurable, attainable goals based on your own personal circumstances and life ideals, you need to formulate a concise plan around how you’re going to achieve those outcomes. Flying blind as a property investor will only result in an inevitable crash and burn.
- Act on impulse/emotion
Successful investment means acquiring top performing assets that align with your overall strategy and approach. Whether you personally love or could live in a property should have no bearing on your decision to add it to your portfolio. Facts, figures and careful research around the market and asset you’re considering are all that count – literally!
- Go it alone
While you might be recalcitrant to pay for advice and/or management of your investments, consider the alternative…going it alone and failing dismally due to lack of industry knowledge and insight.
To make it in this game takes teamwork. Surround yourself with trusted advisers, including a good buyer’s agent, accountant, solicitor and mortgage broker, and you’ll bring your A Game to every transaction.
- Take anything for granted
During periods such as the one we’re currently experiencing in the property market, it’s easy to become a little too sure of one’s own capacity to achieve success. But the fact is, cycles move on and eventually, housing will not be as forgiving a commodity as it can be right now.
Establish cashflow buffers and make sure your portfolio can weather any storm that might arise – be it a personal crisis or prevailing market conditions. You should also have plenty of protection by way of insurances for both your property and yourself personally.
- Set and forget
We often see properties advertised as ‘set and forget’ investment opportunities. Really though, there’s no such thing if you hope to be successful. Reviewing your portfolio with a critical and objective eye on a regular basis is essential. If something isn’t working for you, take immediate action and move on to greener pastures (or better opportunities).
- Speculate on the latest fad
Successful investors certainly consider a range of different prospects when it comes to where, when and how they’ll invest. However, they avoid speculative endeavours at all costs, sticking with their tried and tested formulas in favour of the ‘get rich quick schemes’ that see others quickly come undone.
- Over-commit financially
This speaks for itself really. It’s important now more than ever that you ensure the financial commitments you make as an investor are prudent and sustainable over the long term.
Property that’s going to rake in phenomenal long term capital gains is of course desirable, but not if you can’t afford to hold onto it if (and when) interest rates start to rise or your financial circumstances change in some way.
- Be cheap
Successful investors are willing to pay for sound advice and invest not only in bricks and mortar, but in their own knowledge and education too.
- Ignore the market
Appropriate asset selection relies on an intimate understanding of your market. You must ensure the investments you acquire are desirable to both tenants (who’ll be helping to sustain your cashflow) and owner-occupiers (who determine the going market value of any location).
Demographic data has never been easier to come by thanks to the Internet and talking to local agents will give you a great insight into what your market wants and needs. Ignore tenants and buyers at your own peril.
- Believe the hype
Because they have a sound investment strategy in place and maintain focus on the end goal, successful investors are far less inclined than the masses to believe everything they’re fed by mainstream media about the state of Australia’s property markets.
Scaremongering seems to be a favoured pastime of some industry ‘commentators’, particularly when there’s a lot of activity surrounding certain areas; such as we’re currently seeing with Sydney.
While you should never stick your head in the sand entirely, it’s important that you avoid becoming sidetracked or making expensive decisions based on the latest top selling headlines.
- Follow the crowd
Most successful investors have got to the top of their game by doing what others don’t. Or rather, by not doing what others do. Instead of jumping on bandwagons and following the masses into the market when competition is a lot tougher, they tend to invest counter-cyclically, when others are scared away by negative talk surrounding falling housing values.
- Neglect cashflow
Now more than ever, as APRA’s regulatory threats see lenders tighten their serviceability requirements, it’s important to ensure you’re achieving optimal cashflow.
Keeping on top of rental income and any possible increases you can apply, as well as minimising personal debt (including the mortgage on your own home), along with other strategies to ensure your cashflow is at its absolute peak will be key to long term portfolio sustainability.
If you would like to know more about the mistakes successful investors avoid making at all costs, why not join us for one of our upcoming property investment seminars?
We’ve lined up some impressive industry experts to give you a run down on what’s happening across Melbourne, Sydney and Canberra’s property markets, and of course the Trilogy team will be there to answer your questions around how to best navigate the new lending landscape we’re currently entering.
Look out for your exclusive email invitation then reserve your place.
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).