Speaking to you as a property investor who bought his first investment property in 2006 and who has continued to vigorously acquire in the last two years it’s sometimes good to reflect on lessons learned and how I’m now qualified to say that I genuinely believe property is a sound investment while others just don’t get it.
Have I made mistakes? Sure!
Have I learnt from them? Oh yes!
So can you imagine how easy property investing will be if you avoid these mistakes?
1. This is a serious business
Absolutely! This is property not monopoly. Treat it like a game and hope that someone will land on your property and yes you will fail. Cashflow is the lifeblood of any business and property trust me is no different and without good cashflow then your business will fail. Yes the acquisition process is fundamental and where you make your profit but any property must demonstrate a good return and cashflow well, So aim for a minimum of 8% yield (gross rental/ cost of property and refurbishment) and you can’t go wrong, though typically I aim and get much more from single lets in my goldmine area.
Are you focused on the cashflow?
2. All the gear and no idea
If you are a skier you will know what I mean or even a golfer. Indeed any recreation you undertake you will see those who’ve the state of the art kit but can’t use it. Property knowledge is no different. Seminar junkies trek from location to location investing more and more cash with different people to find the missing piece of the property puzzle. Believe me there is no missing piece and the property market is always evolving. So, yes I learnt from two of the leaders in the property game and yes I continue to train with and for them but here’s the thing I’ve taken action and built a portfolio of property. So you’ve the skills to invest so go practice them. Invest your cash in a property not another training programme unless it’s furthering your knowledge alongside your core activity.
Are you the course junkie?
3. No clear vision
When I ask people why they want to invest in property a typical response would be “I want to get rich or maybe I want to quit my job”. Now this might sound perverse but that’s not a good enough reason. It’s not clear enough, it’s not specific enough and has no clear vision as to what the world will look like when you get there. I want to pay for my kids education! Great but how much do you need for that and how many properties will do that, or how many deals do I have to package and what will tell you that that goal or vision has been achieved. Unfocussed you will sleepwalk along the property road and be prepared to wave as those with a clear vision motor past at speed.
Like me you’re focused on clearly defined goals aren’t you?
4. There’s no F in planning
Any property purchase must be preceded by full due diligence and research so that you are able to invest with all the facts. Will there be a high level of demand for your rented property at the right amount of rent to provide the cashflow you need? What are house prices doing in that particular area, what comparables of sold houses do you have? Don’t make the mistake of buying because it’s cheap: it’s probably cheap for a reason. If you’ve done the research and are happy with the risk then yes buy cheap but ONLY after you’ve checked everything. I buy stuff now that I wouldn’t have touched two years ago but only because I’m thorough in my research.
Be sure to buy after all thorough due diligence.
5. Patience is a virtue
Property investing is no race and no competition. Just because someone is buying a load does not mean that you should be. Their circumstances may be different. They may have more time, money whatever but it really doesn’t matter. What matters is that you go at your pace to learn, research etc and then take action armed with all the facts but please take action. There are thousands of houses out there for sale and the right deals for you will come along and you will know when they are the right deals, believe me.
So to paraphrase Cpl Jones, “Don’t panic Capt Mainwaring!”
Know that when you are aware of the above mistakes you will take action to avoid them and your property investing journey will be a rich and fulfilling one.
To your continued success.