While it’s safe to say that there can be little in life more exciting than investing in your first property, it’s also perhaps the biggest and most life-changing decision the average person will ever make. Whether considering property investment in Oxford for the purposes of letting out or investing in an old building in Bradford to polish-up and sell on, it’s no secret that the money that can be made with the right property investment decisions can be mind-blowing to say the least.
However, there are absolutely no guarantees when getting into this area of investment – regardless of how property investment may be interpreted by some as a safe haven. The long and short of it is that property investment has the potential to be the best or worst decision any individual is ever likely to make – success or otherwise will be determined by how they go about the process.
So rather than focusing on the various things that the first time property investor should be looking to do, what follows is a quick introduction to six of the most common and potentially deadly mistakes to avoid at all costs:
1 – Heart Over Head
First and foremost, this is one of the few instances in life where it is necessary to absolutely ignore your heart and trust 100% of what your head tells you. You could for example fall head over heels in love with a place to such an extent that you would be willing to invest in it without asking so much as a question. However, if you brought your head into the situation, it will probably tell you that in terms of potential as an income-generator, there really isn’t any potential there at all. It’s a case of remembering that this is a business decision as opposed to the fulfilment of a personal dream or desire.
2 – Insufficient Forward Planning
If you are looking to invest in a property for the purposes of letting it out, try to think as far ahead as possible. The reason being that while there may be solid demand from tenants in the area right now, things may have been on a steady decline for years and are only heading deeper into darker territory. The immediate moment of course matters, but not quite as much as the long-term future.
3 – Rushing a Decision
Undoubtedly one of the most fatal mistakes of all when it comes to property investment is that of rushing into a decision simply having been blinded by enthusiasm. Of course you’re excited to get things underway and the sooner you get your new property on the market, the quicker you’ll begin making money. Nevertheless, decisions like they should never be rushed into but should instead be gone over as many times as necessary with a fine-tooth comb until such a time as there isn’t so much as 0.01% doubt in your mind. If any doubt remains, you need more time.
4 – Under-Budgeting
This may be a money making venture, but never underestimate for one moment exactly how expensive it can and will be to invest in real estate. The problem in this instance is that so many first timers see the price of the home, figure they can afford it and then jump right into the buying process. Sadly, when and where all other fees, taxes and charges have been taken into account you will often be looking at another 15% to 20% on top of the property’s original price, which is then taken even further by how much it will cost you to get it ready for and on the market in front of your prospective tenants.
5 – Expecting Overnight Success
It’s difficult for first time property investors to stay level-headed and to maintain a grip on reality when it comes to when and where success will come. Of course those who get it right will indeed be successful, but it will nonetheless take considerable time to break even, let alone turn a solid profit. Or in other words, if you get into the game expecting and striving for overnight success, you are in for quite the disappointment.
6 – The Classic ‘Fixer-Upper’
Last but not least, it’s the classic approach to first time property investment that attracts tens of thousands of newcomers every year. You find a property that is practically on its last legs, you see that it’s on the market for next to nothing and you love the idea of doing it up to such a point as to then being able to use it to make a heavy profit. And this is the kind of approach that has the potential to work, but at the same time the vast majority of those heading down such a route fail to fully take into account the time, money, effort and manpower necessary to get the place back into any kind of workable shape. Just try to remain objective and ask yourself –if it really was such a golden opportunity the likes of which could be turned into a gold mine, why wasn’t it snapped up by a seasoned property developer with a keen eye for exactly these kinds of deals?