Top five mistakes property investors make

Property is a long term investment and proven performer in any economy, but many property investors around Australia continue to lose money on their investment, according to leading Brisbane Property Investment Consultants, Grow Consulting Group.

Managing Director of Grow Consulting Group, Ayda Shabanzadeh, said that it is hearing about these types of instances which put off potential investors.  

"Almost everyone knows someone who has lost large amounts of money through property investment, or they hear about these cases via the media, and this puts them off investing themselves."

However, Ms Shabanzadeh denies that property is a poor investment choice, and says success in this field is more about the approach the investor themselves take.

"Any investors who have lost money through property over the last few years should rather look to the strategy they took when investing, rather than the economy, for answers," she said.

"For example, last year the GFC resulted in an interesting national property market, however the feared market crash didn't eventuate and, by the end of the year, property prices had recovered to levels even higher than pre-GFC levels."

So what are the top five mistakes property investors make, and how can you avoid them?

1. Don't settle for less

One of the most common mistakes investors make is investing in anything that comes available around the time they are looking.

"Investors need to consider whether the property is desirable to tenants, close to transport and amenities, and is in an area of high future development and growth" said Shabanzadeh. "Many investors buy in the same street or suburb just because they can see the property. Be open to investing in other areas and states."

She added that some investors without a professional negotiating on their behalf end up paying too much for the property.

2. Don't compromise your lifestyle

Some investors who lose money on property purchase outside of their own affordability.

"You should always consider your current lifestyle, not only what you want to achieve in the future, and whether you can maintain your lifestyle with this added expense" said Shabanzadeh.

3. Work out your true affordability

Some investors also make the mistake of taking their bank's word as "gold."

"Just because they say they will only approve a loan of $20,000 less than your desired investment property, or won't approve a loan at all, doesn't mean you are out of the game," she added. "Shop around! Similarly, some banks will lend you more than you can really afford. Ensure you have consulted with a professional to work out your true affordability."

4. Dismiss the myths

Another common property investment myth is that you should only invest in land.

"It is a myth that you need to invest in land to see any capital growth. A property in closer proximity to the CBD will have more capital growth and higher returns than a property in the suburbs, " said Shabanzadeh. "Population demographics are pointing toward an increase of single person households and couples without children so it makes sense to invest in smaller properties, such as apartments, rather than family size homes."

5. Set your own goals

Finally, Shabanzadeh says the quickest way to lose money investing in property is by duplicating the strategy someone else has used.

"Just because something has worked for your neighbour or a family member, doesn't mean it will work for you," she concluded. "Everyone is different and has a different situation and different set of goals for the future. You need to take yours into consideration when investing."

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