Property investment has been since long one of the best ways to create long lasting wealth, but, as all the different areas of investing, it needs to be planned and executed knowing what the pitfalls could be and with an appropriate knowledge.
Property investment is interesting, exciting and can be very lucrative provided some basic rules are applied and, above all, keeping always in mind the most common mistakes that property investors are too often falling into. Knowing them will help in planning your lifetime property investment journey to be safe and highly remunerative!
The following are four, out of nine, bad mistakes that too often inexperienced property investors are committing. After reading through and understanding them, remember to stay tuned as we are preparing the second article on this topic with the last three mistakes to be aware of, it will be published within the next seven days.
#1 The Property Investment Mindset & Perception Mistake
This is the very first mistake that majority of young investors are falling into, believing that property investment will make you rich quickly! The “Be a millionaire before your thirties” call for property investment action too often results in making rich the promoter of it and generates, instead, plenty of “High risk of being bankrupted before your thirties” investors!
When you invest in property, the “I want it all and I want it now” wish doesn’t work at all. Unfortunately, when we let our human emotional side prevailing on the rational one and we rush in following the Buy Now call to action, we put aside the required patience, perseverance and self-sacrifice which are instead needed to secure the best property investment choice.
Searching for the right property can easily take several weeks of scouting sales galleries, doing research and understanding the potential of the chosen location. We need to keep in mind that one property investment is not a one-off purchase, it generates a mortgage repayment that will need to be served for many years to come.
#2 The Lack of Strategy & Planning Mistake
The Real Estate Investment Game is a long-term journey, it needs to be carefully planned in terms of strategy and financial ability. Too many are investing in properties without even knowing their purpose. The Why of our property investment or, what do we want to achieve out of three possible choices:
- Priority towards high capital gain
- Priority towards high return on investment
- Priority towards a combination of the two above
Defining and adhering to a strategy ensures the best outcome for the generated cashflow or the possibility to add a new property to the portfolio in a shorter timeframe. Defining the Why, setting your strategy and following it are the very first three steps towards a successful and highly remunerative investment journey!
#3 The Location Focus Mistake
Even though it might be tempting, planning our next property investment with a One-Location-For-All strategy most of times is not producing the best outcomes. As well as fisherman are keeping on searching better spots for their catches, property investors shall also not focus on one location but widen up their searches beyond the area, district, or city where they live.
Expanding the search area for your next property investment it is a smart choice to avoid missing opportunities and to differentiate as much as possible your portfolio while reducing the risks. Property investment becomes profitable based on the demand which, as we all know, is driven by different factors such as economic growth, education hot spot, new CBD, public transportation and so on.
Concentrating all property investments in one location only is clearly limitative and might be resulting in the failure of your investment journey.
#4 The Never Ask Never Know Mistake
We all know that if we want to know something, we need to ask! This perfectly applies to the negotiation stage of a property investment, and it can relate to the value as well as to the fittings, payment terms and condition of the property.
Let’s keep in mind that we are deciding to buy a several hundred-thousand-ringgit asset, a price reduction will impact positively the cashflow and the monthly repayment of the mortgage. Not negotiating or getting a normal deal instead of a good deal will very likely affect the resale time of your investment.
This is it for the first four basic mistakes that too many property investors are often falling in, three more will be explained in my next article that will be published here next week, keep an eye on the blog and on the Grand Damansara social media as it will be announced there.
While in the Grand Damansara website, I suggest you have a look at what are the characteristics and offerings of this unique development project right in the heart of Damansara. Investment wise, I look at it as a very good in terms of potential ROI with a tenant target within the fast-growing groups of young professionals and digital nomads. The selling value will definitely allow a positive property cashflow!
