Property Investments need well-planned property investing strategies to build a multi-million dollar property portfolio.
Here we discuss 12 key Reasons Why People Fail at Property Investments:
1. Property Investing as an Adhoc Thing Rather than a Business will make you Fail at Property Investments
This is what 95% percent of people do. Their accountant tells them that they are paying too many taxes. So, they google the term “Buying investment property” contact a few providers from the search results and sign a contract. The 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 the future. To me, this process is no more than financial suicide. Instead, people should spend some time researching, upgrading their knowledge, doing their due diligence, building up long-term and short-term strategies, having an exit plan, and then only buying an investment property. It is not ad-hoc stuff, it is serious business and like any serious business, it takes time and effort.
2. Having Zero Strategy
This goes back to the previous point. People buy property because a friend has bought it, to save tax, or to flaunt their property investment 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”, and “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 a lot of effort and time.
3. Having the Wrong Strategy makes 95% of People Fail at Property Investments
This is what 95% of the people do “They buy a property with the 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 the right expectations from the property. Just buying something and expecting that God will bring the boom to the area, this just does not work because God has other important work to do rather than bringing a boom to the property market.
4. Changing Strategy Midway is a disaster for property investments
A lot of people panic, when their original expectations are not met or when the strategy falls through. Property investments are long-term things. In 2017, a 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 the market, and people were selling it on sites like a gum tree.
5. Impractical Expectations
This goes back to my earlier comment, about 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 is my friend who bought a one-bedroom apartment in Black town for 600k 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.
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6. Having Cash Flow Concerns is another factor leading to People Failing at Property Investments
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 at night because having so many loans is very daunting”. It is important to sit down with your financial planner, and accountant and look at the long-term and short-term goals and mix a few strategies rather than following one strategy blindly.
7. Having Over-confidence
This is very important, and a 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 doing their due diligence and get caught up in the DEAL.
8. Getting Distracted by the Media takes you away from Property Investments
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 sorts of mistakes. Money flows from the uninformed to the informed.
Money flows from unknowledgeable to knowledgeable. Money flows from the impatient to the 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.
9. 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 ratings than the other that will reflect in the property price. If something is priced lower,
does not mean that it is a 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.
10. Location Is Important for the Property’s Capital Growth
Location is very important. Being in the right school catchment. Commutable to the city. Not very close to the 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 marketing and media gimmicks.
11. Not Having Investment-grade Properties is another reason that makes People Fail in Property Investments
This is again a very important point and 95% get caught on it. People mix first-home buying with property investments. They buy their first home and later convert it into an investment. Though it is not investment-grade property. Nearly everyone is confused about whether they should buy their first home or investment. So, they buy something and call it an investment.
12. Not Having a Team Is Big Factor in Property Investments Failure
95% of people do it alone. They do not have a team of a financial planner, mortgage broker, accountant, and solicitor. They google for something, buy an investment property somewhere, and flaunt in front of their friends that they have an investment property. What is the long-term strategy and how that property investment 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 your retirement years?
All these are important questions and serious questions, which need to be discussed with licensed professionals so that something can be done about them.
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Disclaimer: Articles in this blog are just the author’s or authors’ personal opinions.
It may or may not be correct. Please do your own due diligence and seek professional advice according to your own personal circumstances. The author or authors cannot be held responsible/liable for any content in this blog.
