We all get told what we should be doing with investment properties, but it’s not as often you get told what not to do.
Here are six common mistakes that you do not want to be in the middle of.
1. Assuming you will never sell
One of the common misconceptions in property is that you will just hold the asset forever. While for some this is the case, it’s far more likely that you will need to sell the property at some point. If you do not think about your exit strategy, you may find yourself missing out on other opportunities or, worse, you may find yourself unable to sell the home if the worst happens and you do need to sell.
Thinking about how it will sell, and when may be optimal, is very important for every investor. Never make the assumption that you will hold for the long-term. By all means, plan ahead, but ensure you have that escape route in mind.
2. DIY-ing without experience
Many an investor has gone into their property and attempted to fix, renovate or style a home on their own – with no prior experience. If you’re a sparky by trade, then go ahead and get hands on. But if you’re not exactly handy either get trained up first or back off. Don’t risk wrecking your property or rendering it unsafe for yourself and others by trying to save some money on labour.
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3. Forgetting to look for independent advice
It’s all well and good having a chat with the real estate agent selling you a property, or the developer who is building the apartments you have been looking at. But nothing can replace solid, independent advice from impartial and qualified professionals. Seek out a second opinion where possible, and always be looking for what their ulterior motive may be.
4. Postponing maintenance and tenant requests
While tenant requests can be difficult and, for some, an irritation – you cannot brush them aside. The best landlords will always keep a close watch on what their tenants are asking them to fix – perhaps there’s an indication of a bigger problem, or perhaps the entire home needs updating. Similarly, small problems have a habit of spiralling into larger ones. That small leak under the upstairs sink? It’s now a large leak that has spread to the downstairs ceiling.
Don’t let things get out of hand when the fix may have been small in the first place. Remember that your tenants are living in this property as their home and are deserving of a high standard – keep your tenants happy, and they will usually look after your property.
5. Ignoring your own risk profile
Don’t be encouraged into buying or engaging in a property or scheme that makes you uncomfortable. There are plenty of opportunities to jump out of your comfort zone in life, but when it comes to your finances and your retirement plan this might not be one of them. Be honest with yourself about what you are comfortable with, including how much debt and outgoings you can accept and don’t be coerced into doing anything else by external parties.
If you do feel you are being too conservative, speak to someone close to you that you can trust. Remember, though, what is right for someone else isn’t necessarily right for you.
6. Jumping on the bandwagon
Lastly, we have a tendency to see what other people are doing and getting excited about it. There’s no harm in following trends, but you may find that it stilts your potential growth with investments. Many people following mainstream media reports of ‘hotspots’ or the advice they get from their parents at a barbecue are likely to see themselves buying into the market far too late. Do not get caught up in property hysteria that sees many overpaying and missing out on the best growth. Always take a step back and look at the entire picture.
This article first appeared on Property Observer.