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According to CoreLogic, there are currently over 2 million property investors in Australia, but a majority of these are struggling to grow, or maintain, their success.
In fact, according to onproperty.com.au only 18 per cent of these investors own two properties and less than 1 per cent own five or more, which shows many investors are struggling when it comes to building their portfolios.
Although any asset is an achievement in itself, success to most property investors is really determined by their ability to continue purchasing real estate. Unfortunately, so many Australians save for their entire working lives to be able to afford an investment property, but very often once they achieve this, their progress remains stagnant because they aren’t sure of what to do next.
Here are the five ways investors experience failure in their portfolios:
• Being selfish. When a person is investing such a large amount of money it’s natural for them to want it to be something that they consider ‘perfect’. When it comes to real estate however, rather than purchasing a property based on personal preferences, it’s crucial to prioritise the wants and needs of the target tenant. If an investor puts themselves first they not only decrease the pool of prospective tenants, but they also risk making emotionally-charged decisions.
• Impatience. When it comes to property investment, patience is definitely a virtue. Real estate is a long-term commitment, and a common example of an investor failing to reach their target financial outcome is when they lack patience and flip the property for a short-term gain. In order to increase capital growth, and guarantee rental advances, a property needs to be held for at least seven years.
• Not taking responsibility. Often there are numerous parties involved in purchasing an investment property, and a common mistake among failed investors is to blame others for issues that occur. Although certain tasks may be managed by particular people, the responsibility of the property ultimately lies with the investor. If something goes wrong it is crucial to take accountability and work to rectify the situation rather than passing the blame.
• Hesitating. Countless investors experience ‘analysis-paralysis’ and overly scrutinise any potential purchase to ensure the property is ‘perfect’. Although it’s always important to make an informed decision, if an investor has done their due diligence and is comfortable with the return, it’s important to buy without too much hesitation to avoid missing out.
• Doing it alone. In order to cut costs many investors attempt to find, purchase, and manage a property alone. Although this is possible, for most, it results in failure or having to spend more in the long-run to rectify problems that arise. To guarantee success it’s important to enlist the help of professionals who can ensure the entire process runs smoothly and with the investor’s best interests in mind.
Many people avoid investing in property out of fear of failing. However with the Australian real estate prices historically doubling every 7-10 years, with the right mindset it can be extremely profitable.
An investment is an asset or item purchased with the expectation that it will generate income or appreciate in value in the future.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.