12 Reasons Why People Fail In Property Investments

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– PROPERTY INVESTING AS ADHOC THING RATHER THAN A BUSINESS

This is what 95% percent of people do. There accountant tells them that they are paying too many taxes. So, they google for the term “Buying investment property” and contact a few providers from the search results and sign a contract. Next thing they do is that when they meet their friends, they flaunt that they have a property portfolio, are paying less tax and are going to be rich in future. To me, this process is no more than a financial suicide. Instead, people should spend some time on researching, upgrading their knowledge, do their due diligence, build up long term and short-term strategies, have an exit plan and then only buy investment property. It is not an ad-hoc stuff, it is serious business and like any serious business, it takes time and effort.

– HAVING ZERO STRATEGY

This goes back to the previous point. People buy property because friend has bought, to save tax or to flaunt about their property portfolio. They do not consider strategies at all. People ask, “Just tell us where the next hotspot is, and we will buy there”. This is not how it works. There are more than 100 strategies in property
investment. Please ask yourself “Why you are buying”, “What will happen if the plan fails”, “How will you manage cash flow”. There is no hot spot, you will have to make it a hot spot by buying an investment grade property and adding value to it. Some people keep buying in Sydney and some people keep in Brisbane. They do not spend time in upgrading their knowledge because that takes lot of effort and time.

– HAVING WRONG STRATEGY

This is what 95% of the people do “They buy property with a wrong strategy and wrong expectations”. They buy in Melbourne with Sydney expectations and they buy in Brisbane with Melbourne expectations. It is important to have right expectations from the property. Just buying something and expecting that God will bring boom to the area, this just does not work because God has other important work to do rather than bringing boom to property market.

– CHANGING STRATEGY MIDWAY

Lot of people panic, when their original expectations are not met or when the strategy falls through.  Property is a long-term thing.  In 2017, lot of Sydney people bought land in Melbourne with expectations that it will grow by 100k per year. But it didn’t happen, in panic, all that land came back to market, and people were selling it on sites like gum tree.

– IMPRACTICAL EXPECTATIONS

This goes back to my earlier comment, buying in Melbourne with Sydney expectations and buying in Brisbane with Melbourne expectations. They are all different markets. One city may be capital gain and the other may be cash flow and another may be neither cash flow nor capital gain. Another great example, my friend bought a one-bedroom apartment in Black town for 600 k and had expectations that it will be more than 1 million in 2 years’ time. It is important to be reasonable and practical regarding your expectations from an investment property.

– HAVING CASH FLOW CONCERNS

My friend bought a few properties in Sydney, all negatively geared and now have cash flow concerns. One day he messaged me “I can’t sleep in night because having so much loan is very daunting”. It is important to sit down with your financial planner, accountant and look at the long term and short-term goals and mix a few strategies rather than following one strategy blindly.

– HAVING OVER-CONFIDENCE

This is very important, and lot of people get caught in it. They get over motivated and are ready to jump into every opportunity. They move quickly when some deal comes on the table. They don’t spend time in doing their due diligence and get caught into the DEAL.

– GETTING DISTRACTED BY THE MEDIA

Negative news sells. By relying too much on the media and forgetting the facts and figures, people get side-tracked. People panic and make all sort of mistakes.  Money flows from uninformed to the informed.
Money flows from unknowledgeable to knowledgeable. Money flows from impatient to patient. Fearing too much is another problem. Because there is so much negativity around, many people take a safe journey and do not invest at all.

– NOT KNOWING THAT THERE ARE MULTIPLE PROPERTY MARKETS IN AUSTRALIA

Every city in Australia is different. Even every suburb is different. There are different property markets within a suburb as well. For example, if there are 2 schools, one with more rating than other that will reflect in the property price. If something is prices lower,
does not mean that it is deal as it may be in a different school zone. People do this mistake in Baulkham hills. Paying top dollars, only to find out that their house is not in Matthew Pierce catchment.

– LOCATION IS IMPORTANT FOR PROPERTY’S CAPITAL GROWTH

Location is very important. Being in the right school catchment. Commutable to city. Not very close to train station. Close to amenities. Future growth prospects planned and future spending by the government. Researching and doing due diligence on location is very important. Reading the facts rather than relying on the marketing and media gimmicks.

– NOT HAVING INVESTMENT GRADE PROPERTIES

This is again very important point and 95% get caught on it. People mix first home buying with investment. They buy first home and later convert it into investment. Though it is not investment grade property. Nearly everyone is confused whether they should buy first home or investment. So, they buy something and call it an investment.

– NOT HAVING A TEAM

95% of people do it alone. They do not have a team of financial planner, mortgage broker, accountant, and solicitor. They google for something, buy investment property somewhere and flaunt in front of their friends that they have investment property. What is the long-term strategy and how that property will benefit you in long term? How
it will make you financially independent or help you in your retirement years? What will be your source of income in retirement years?

All these are important questions and serious questions, which needs to be discussed with licensed professionals so that something can be done for it.

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