When you’re starting out as an investor, the idea of property and financial freedom is full of excitement and promise.
Yet, the closer you get to making it a reality, the more stressful and confusing it seems to become.
More often than not, this is because you’re receiving advice from all over the place and are trying to make sense of all of the conflicting information.
If you are unsure about what action to take next, there are 3 simple but important questions you can ask yourself to remain decisive in your next property purchase:
- Do I understand all of the costs of buying?
- Am I buying logically or emotionally?
- Am I getting the right financial advice?
If you can answer these questions confidently, you’re well situated to avoid the most common first-time investor mistakes. If you’re unsure, let’s dive into this further.
#1: Do I understand all of the costs of buying?
Most property buyers are terrible at accurately estimating the costs involved in buying an investment property.
More often than not, they get an estimate of what amount they can borrow from an online calculator, and do some half-hearted research into costs like rates and water.
But there is a lot more to it.
You need to consider the other costs of purchasing a property, not just the deposit.
There will be a number of upfront costs and fees, including:
- Stamp duty,
- Loan application fees,
- Settlement costs, and
- Mortgage insurance (if you don’t have the 20% deposit).
All of these costs add up – and that’s before the regular costs of property ownership!
As a property owner, you’re still responsible for council rates, water charges, maintenance expenses and insurance.
You’ll also want a financial buffer to protect against rising interest rates and unexpected financial hardships.
Not as simple as paying a deposit, right? Make sure you understand all of these costs before diving into a property purchase.
#2: Am I buying logically or emotionally?
You must have heard it before – stay objective when it comes to buying property.
But although we hear it all the time, it can be difficult to remember when you walk into a property that is your dream home.
Instead of remaining objective, you find yourself daydreaming about wallpaper and decor – even though you won’t be living there!
This will be obvious to the real estate agent, and will make it a lot harder to negotiate a great price.
This kind of thinking can also cause you to go over your budget, opening you up to all kinds of financial strife.
At the end of the day, all the fancy renovations and fixtures in the world won’t make up for prime location. The best thing you can do is purchase a property that is close to amenity and offers occupiers real convenience.
#3: Am I getting the right financial advice?
Just like it doesn’t make sense for your hairdresser to advise you on business decisions, you can’t rely on your real estate agent when making financial decisions.
When it comes to buying property, real estate agents only act in the interests of the seller. They do not have your best interests at heart, no matter how sincere they sound.
It also pays to remember that a real estate agent is not a lawyer. Their advice on clauses and conditions to add to your contract should always be taken with a grain of salt.
Before making the decision to buy, seek professional advice from qualified experts. Always look for ways to get more protection, flexibility and ownership over your decision.
The key to success
The road to success is paved with many investors who have never quite accomplished lasting success.
If you want to achieve real success through property, reach out to the expert team at Adpen. We’d love to help you with your next property purchase and support you on your journey to property success.