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Seven mistakes to avoid when buying property

When it comes to buying property, there is no shortage of information and seminars that will ‘guarantee success’.

Many Australian’s have done very well out of property investment; however, in today’s market, most clients are asking:

Is property still a good investment?

How do I avoid becoming a loser in the property game?

While buying property may not be for everyone, it is still an excellent long-term investment. The challenges lie in the changing nature of our work and our society.

Here are seven tips to help you make the best decision so you can succeed in your property journey:

1. Buying with your heart

When buying a home, about 90% of your purchasing decision will be based on emotion and only 10% on logic. This is understandable, as your home is often where you’ll raise a family, but it is also an investment.

Letting your heart rule your buying decision is a common trap to be avoided at all costs. Instead, base your decision on analytical research. At the end of the day, investing is all about economics, not the emotions. At Triple Zero property, we invest heavily in research and see it as essential.

2. Not setting your goals

It’s an old adage but very true.

Buying property without a plan of attack is like setting out on a road trip without a map…you’ll inevitably take a wrong turn and end up lost!

What do you want to achieve?

  • Buy a family home?
  • Buy property but continue to rent?
  • Purchase your first investment property using equity from your own home?

Carefully plan out what you would like to achieve, then will end up exactly where you want to be!

3. No Diving or dithering!

Two of the most common traits when it comes to buying property:

  1. Acting too impulsively
  2. Being overly cautious and never acting at all

The first is being in too much of a hurry. 

The second are procrastinators and are their own worst enemy: paralysis by analysis.

4. Speculation over patience

Property investing is not a get rich quick scheme. It’s the time in the market, not just timing the market.

Over time, you use the gains you make from one property to leverage into another property and then with the combined profits you make from those two properties, you buy another to add to your portfolio.

5. Not doing your homework

This is a big mistake that many want-to-be investors make.

It’s about location, understanding the demographics, demand, type of property (unit, townhouse, terraced or stand-alone) fit for area…the list goes on. Also, understanding the benefits of new over old.

6. Buying the wrong type of property

This is a big mistake that many want-to-be investors make.

It’s about location, understanding the demographics, demand, type of property (unit, townhouse, terraced or stand-alone) fit for area…the list goes on. Also, understanding the benefits of new over old.

7. Not understanding cash flow

Can you handle that mortgage?

If you are a first home buyer or an investor: Cashflow is king.

Investors often fall into poor cashflow management. This is why we love new. A new property allows us to use ‘negative gearing’ to provide cash flow, it negates ongoing repairs and maintenance, not just saving money in the initial purchase phase.

For new home buyers, research best rates and all government incentives available when you build your first house.

Always seek the advice of a property focussed accountant. Your structure can be just as important as the property you buy.

Setting up an incorrect financial structure can be just as detrimental to your investment endeavours as selecting the wrong type of property. Build your team.

So, what now?

Owning property is a great way to wealth in Australia. It’s proven, tried and tested but it needs to be done right!

If you are looking for independent advice about property, wanting some guidance about where to start or where to invest, we would love to assist you in that journey.