Majority of first-time investors could be set for failure

By Steven Cross 03 September 2013 | 1 minute read

Less than half of first-time investors are adequately researching properties before purchasing, according to new research.

A recent survey by Mortgage Choice found that over 50 per cent of first-time investors were not considering population growth in their purchasing decisions.

Director of wHeregroup Todd Hunter said he wasn’t surprised by the results.

“It’s well known that most investors don’t do their homework,” he told Smart Property Investment.

The survey also revealed that while 55 per cent of first timers looked at local amenities and entertainment, just 61 per cent were influenced by tenant demand.

“Most would buy in the area they live because they feel they know the suburb,” said Mr Hunter.

Mr Hunter suggested that investors who don’t look for key growth drivers such as population growth and match them with expected supply and demand are setting themselves up for failure.

“When looking at things like population growth, you need to be looking at supply and demand as well,” he said.

“Take Melbourne for example, it has some of the highest population growth rates in the country, but the city has been flooded with properties and there are too many properties for the demand.”

Regardless of Mr Hunter’s warning, the survey found that despite their lack of research, four out of five first-time investors had high hopes for building a portfolio.

Over 60 per cent claimed they wanted to purchase up to three properties, 11 per cent wanted between four and five, and 18 per cent of first timers claimed they plan ‘to buy as many properties as possible’.

Majority of first-time investors could be set for failure
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